The Canadian Securities Administrators yesterday published guidance regarding the use of a "Fund Facts" document to an satisfy current prospectus delivery requirements. While amendments to NI 81-101 Mutual Fund Prospectus Disclosure to finalize requirements to produce and file the Fund Facts document became effective on January 1, 2011, the use of the Fund Facts will not be mandatatory until later this year. Yesterday's notice, however, anticipates requests by investment funds for exemptive relief to use the Fund Facts before their mandatory use (April 8, 2011 to begin filing the Fund Facts documents with prospectuses, while funds will have until July 8, 2011 before the Fund Facts documents must be filed for each class or series of securities of the mutual fund).
As such, the guidance sets out a number of terms and conditions that the CSA anticipates requiring as part of such an exemption:
- The mutual fund must file a Fund Facts in compliance with Form 81-101F3 Contents of Fund Facts Document.
- An amendment to the simplified prospectus (SP) must be filed to specify, under Item 3 of Part A of Form 81-101F1 Contents of Simplified Prospectus, that the Fund Facts is incorporated by reference into the SP.
- A mutual fund must continue to file the SP and annual information form (AIF), as required by securities legislation.
Availability of documents
- The Fund Facts must continue to be made available to investors on the mutual fund’s or mutual fund manager’s website and delivered or sent to investors free of charge upon request.
- A mutual fund’s SP and AIF must continue to be delivered or sent to investors free of charge upon request.
- A Fund Facts must be delivered in accordance with the current prospectus delivery requirements under securities legislation.
- The current withdrawal and rescission rights under securities legislation that apply to delivery of, and failure to deliver, the prospectus will apply to delivery of, and failure to deliver, the Fund Facts. These rights must be disclosed in or with the Fund Facts.
- A Fund Facts may only be bound with other Fund Facts that are being delivered at the same time within the current prospectus delivery requirements for mutual funds purchased by the investor.
Expiry of exemptive relief
- Any exemptive relief granted will expire upon the coming into force of any legislation or rules relating to delivery of the Fund Facts to satisfy the prospectus delivery requirements under securities legislation. This is commonly referred to as a “sunset clause”.
According to the CSA, other terms and conditions may also be considered. For more information, see CSA Staff Notice 81-321.