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CI Investments Inc.

2021-03-18 | Decision | 81-102 | Investment funds and structured products | https://www.osc.ca/en/securities-law/orders-rulings-decisions/ci-investments-inc-27

National Instrument 81-102 Investment Funds, ss. 5.5(1)(b) and 19.1(2).


The Securities Commission approved mutual fund mergers that did not meet the criteria for pre-approved reorganizations and transfers as per National Instrument 81-102 Investment Funds (NI 81-102), specifically section 5.5(1)(b). The key reason for requiring approval was that the terminating and continuing funds did not have substantially similar fundamental investment objectives. However, the mergers complied with all other pre-approval criteria, including securityholder vote and independent review committee (IRC) approval.

The application was made by CI Investments Inc. on behalf of the terminating funds, which were to be merged into corresponding continuing funds. The decision was based on representations by the manager, which included the funds’ compliance with securities legislation, the funds’ distribution through a simplified prospectus, and the manager’s registration status.

The proposed mergers were announced to securityholders and the market, and the IRC determined the mergers would result in a fair and reasonable outcome for the funds. Securityholders were to vote on the mergers at a special meeting, with adequate disclosure provided to inform their decision.

The mergers were intended to benefit securityholders through a more streamlined fund lineup, increased portfolio diversification, larger fund net asset values, and lower management and administration fees. The costs of the mergers were to be borne by the manager, and no sales charges would be imposed on the funds’ securityholders due to the mergers.

The decision granted approval for the mergers, contingent on the manager obtaining prior approval from the terminating funds’ securityholders at the special meeting. The mergers were scheduled to occur after the close of business on a specified effective date, with the terminating funds to be wound up soon after.