Canada: OSC Staff Provides Views Of Investment Fund Prospectus Disclosure

The OSC released a notice today setting out the views of OSC Staff on the disclosure required by investment funds that use Form 41-101F2 (pre-IFRS version, IFRS version) when filing prospectuses. The notice addresses Staff's concerns regarding investment funds departing from the form's general requirements relating to the use of plain language, brevity and the ordering of information and use of headings.

First, in Staff's view, cover page and prospectus summary disclosure tends to be overly detailed, in contrast to Staff's expectations that it include a brief description of the investment fund and the securities to be distributed. As such, Staff specifically request that cover page disclosure be limited to the disclosure specifically mandated by the form, while prospectus summary disclosure generally only provide a brief summary of information that appears elsewhere in the prospectus.

On the other hand, with respect to disclosure about investment objectives, OSC Staff expressed concern regarding the limited nature of disclosure regarding the nature of the returns that the investment fund seeks to provide to investors. The notice specifically reminds filers to comply with all aspects of Item 5 of the form.

Finally, the notice describes the recent filing of prospectuses that combine disclosure for multiple ETFs in the same document. In response to this development, the notice states that the number of investment funds offered in a prospectus should be limited to investment funds with "substantially similar investment objectives, strategies and features." According to Staff, where the number of investment funds incorporated into one prospectus interferes with the presentation of key information in a clear, concise and comparable format, filers will be requested to separate the investment funds into different prospectus documents.

For more information, see OSC Staff Notice 81-714.

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