The Securities Commission has approved an application by an investment fund manager for a transaction involving the transfer of assets from one mutual fund to another, in accordance with section 5.5(1)(b) of National Instrument 81-102 Investment Funds (NI 81-102). The transaction will allow certain securityholders of the transferring fund to become securityholders of the receiving fund through a tax-advantaged structure known as a Qualifying Disposition, as per section 107.4 of the Income Tax Act (Canada).
The investment fund manager, registered in multiple Canadian provinces and territories, manages both the transferring and receiving funds, which are open-ended mutual fund trusts established in British Columbia and reporting issuers in Canada. The transaction is intended to benefit investors by incorporating a passively managed index fund into their portfolios without incurring significant capital gains or transaction costs.
The independent review committee of the funds has recommended the transaction as fair and reasonable. Securityholders have been provided with adequate disclosure, and the necessary consent and amendments to the trust indenture have been addressed. The transaction steps include distributions, asset value determination, asset transfers, unit cancellations, and new unit issuances.
The British Columbia Securities Commission, acting as the principal regulator and representing the decision of the Ontario securities regulatory authority, has granted the exemption sought, confirming that it meets the legislative requirements.