The Securities Commission has approved a series of fund mergers proposed by National Bank Investments Inc. under National Instrument 81-102 Investment Funds, subject to certain conditions. The decision was based on the following key points:
1. The mergers involve multiple Terminating Funds being merged into corresponding Continuing Funds, with the goal of streamlining offerings and potentially reducing costs.
2. The mergers did not meet all the criteria for pre-approval under section 5.6 of Regulation 81-102 because:
– The investment objectives of the Continuing Funds were not substantially similar to those of the Terminating Funds.
– The fee structures were not substantially similar.
– Some mergers would not qualify as tax-deferred transactions under the Income Tax Act.
– Preliminary fund facts documents were sent instead of final versions for new series of Continuing Funds.
3. Despite these discrepancies, the mergers complied with other pre-approval criteria, including securityholder votes and Independent Review Committee (IRC) approval.
4. Securityholders were provided with adequate disclosure to make informed decisions, including the potential tax implications of the mergers.
5. The mergers were deemed beneficial for reasons such as improved fund diversification, increased market presence, and in some cases, stronger long-term performance and lower fees.
6. The Commission’s approval was contingent on obtaining prior approval from the securityholders of the Terminating Funds and, if applicable, the Voting Continuing Funds.
The decision was made in accordance with the securities legislation of Quebec and Ontario, and the relevant regulations including CQLR c. V-1.1, r. 39 (Regulation 81-102), the Income Tax Act, and other related regulations. The anticipated effective dates for the mergers ranged from May 21, 2021, to June 4, 2021.