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 funds.

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 Funds.

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 jurisdictions.

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.

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