Mutual Fund families that offer fund of funds products in
Québec (the "Québec Top Funds") may now be
in a position to choose underlying investments in a broader pool of
Section 2.5(2)(c) of National Instrument 81-102 – Mutual
Funds ("NI 81-102") requires that an underlying fund in a
fund of fund structure be a reporting issuer in the same
jurisdictions as the top fund. Until recently,the Autorité
des marchés financiers ("AMF") required an
underlying fund to file a non-offering prospectus with the AMF in
order to obtain reporting issuer status in Québec.
Underlying funds had to prepare and file (in both English and
French) the non-offering prospectus with the AMF before becoming
the bottom fund in a fund of fund structure involving a
Québec Top Fund. Many mutual fund families voluntarily chose
not to become reporting issuers in Québec to avoid the costs
associated with such filing. As a result, many potentially
attractive underlying funds were not marketed to Québec Top
The AMF recently issued a discretionary decision order allowing
a number of mutual funds to become reporting issuers in
Québec by filing an application to be qualified as reporting
issuers without having to prepare and file a non-offering
prospectus with the AMF.
As a result, Québec Top Funds can now invest in those
underlying funds in compliance with section 2.5 of NI 81-102.
BLG's Investment Management Group assisted those issuers in
becoming reporting issuers in Québec without incurring the
obligation to prepare and file translated offering documents with
the AMF. It allowed our clients to offer to important Québec
Top Funds their mutual funds as underlying funds. Each of the
mutual funds was granted reporting issuer status in Québec
on the basis that (i) it was subject to continuous disclosure
requirements in another Canadian jurisdiction and (ii) it was not
in default of its regulatory obligations in other
BLG's Investment Management Group is pleased to have brought
forward this novel application on behalf of its clients and
achieved its desired outcome, which constitutes a new development
in Canadian securities law.
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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