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Guardian Capital LP et al.

2022-08-30 | Decision | 81-102, 81-101, 41-101 | Investment funds and structured products | https://www.osc.ca/en/securities-law/orders-rulings-decisions/guardian-capital-lp-et-al-6

National Instrument 81-102 Investment Funds, ss. 10.3(1) and 19.1. National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 2.1(1), 4.1(3)(a) and 4.1(3)(d), and 6.1. National Instrument 41-101 General Prospectus Disclosure, ss. 3B.2(2)(a) and (d), 3B.3, and 19.1.


The Securities Commission has granted an investment fund designed for retirees, the GuardPathTM Modern Tontine 2042 Trust (the Tontine Trust), relief from the requirement that the redemption price of a mutual fund security must be the net asset value (NAV) next determined after a redemption order is received, as per subsection 10.3(1) of National Instrument 81-102 Investment Funds (NI 81-102). Instead, the Tontine Trust will pay a discounted redemption price that starts at 95% of NAV and decreases over 10 years to 50% of NAV, where it will remain until the fund’s termination in 2042. This pricing structure is key to generating the Tontine Payout, a feature of the fund’s operation in its final year.

Additionally, the commission granted relief to both the Tontine Trust and the GuardPathTM Managed Decumulation 2042 Fund (the Decumulation Fund) from certain disclosure requirements under National Instrument 81-101 Mutual Fund Prospectus Disclosure and National Instrument 41-101 General Prospectus Requirements. This relief allows the funds to include charts in their Fund Facts and ETF Facts documents that show indicative returns, reinvested distributions, and cumulative cash payouts upon redemption, along with the assumptions behind these charts. This information is considered essential for investors to understand the risks and determine the suitability of the investment.

The relief is contingent on the Tontine Trust paying the specified Redemption Price and prominently disclosing the redemption price schedule and its impact on NAV on the cover page of the Prospectus, Fund Facts, and ETF Facts documents. The decision underscores the importance of clear, prominent disclosure to ensure investors are not misled and can make informed decisions.