Exemption Orders (Discretionary)
USC HORIZON EDUCATION SAVINGS PLAN
2001 BCSECCOM 920
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Scholarship plans exempted from the requirement to file with the securities regulatory authorities, and to send to their security holders, interim financial statements for the first and third quarters of their financial year.
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c.418 s. 91(1)(b)
Securities Rules, B.C. Reg. 194/97, s. 149
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, ONTARIO, NOVA SCOTIA AND NEWFOUNDLAND
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF USC HORIZON EDUCATION SAVINGS PLAN, PROTÉGÉ GROUP EDUCATION SAVINGS PLAN, AND PROTÉGÉ INDIVIDUAL EDUCATION SAVINGS PLAN
MRRS DECISION DOCUMENT
WHEREAS the securities regulatory authority or regulator (the “Decision Maker”) in each of British Columbia, Alberta, Saskatchewan, Ontario, Nova Scotia and Newfoundland (the “Jurisdictions”) has received an application from The International Scholarship Foundation (the “Foundation”), in its capacity as promoter, sponsor and administrator of Protégé Group Education Savings Plan and Protégé Individual Education Savings Plan (together, the “Protégé Plans” or a “Protégé Plan”) and USC Horizon Education Savings Plan (the “Horizon Plan”) (collectively, the “Plans” or a “Plan”), for a decision pursuant to the securities legislation of the Jurisdictions (the “Legislation”) exempting the Plans from the requirement to deliver and file financial statements for the first and third quarters of each financial year of the Plans;
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Ontario Securities Commission is the principal regulator for this application;
AND WHEREAS the Foundation has represented to the Decision Makers as follows:
1. The Foundation is a not-for-profit corporation without share capital, incorporated on February 19, 1990 under the Canada Corporations Act. The Foundation is the successor to an Alberta not-for-profit corporation incorporated in March 1965.
2. The Foundation was established for the purpose of providing financial assistance to students who attend post-secondary educational institutions, by sponsoring education savings plans such as the Plans.
3. The Plans are education savings plans that qualify for registration under the Income Tax Act (Canada) (the “Tax Act”) as registered education savings plans (“RESPs”). The assets of the Plans are held in trust by The Royal Trust Company (the “Trustee”) pursuant to separate trust agreements dated as of June 30, 2000 in respect of the Horizon Plan and November 8, 2000 in respect of the Protégé Plans.
4. The Horizon Plan is distributed under the USC Education Savings Plans’ prospectus dated August 22, 2000 and the Protégé Plans are distributed under the Protégé Education Savings Plan prospectus dated November 22, 2000. The Plans are currently in the process of renewing their prospectuss, having filed their pro forma prospectuses separately on July 6, 2001.
5. The Plans are reporting issuers under the Legislation of each Jurisdiction and are not in default of any requirements of such Legislation.
6. The Plans are offered to each person (the “Subscriber”) who enters into an education assistance agreement with the Foundation, whereby the Subscriber agrees to deposit a lump sum or series of payments in accordance with the terms of the Plan. These deposits are held by the Trustee on behalf of the Subscriber and the designated beneficiary (the “Beneficiary”) of the Subscriber. Each education assistance agreement is thereafter registered under the Tax Act as RESPs.
7. In the case of an education assistance agreement under the Protégé Plans, the Subscriber authorizes certain deductions of enrolment fees and depository fees and other permitted deductions, where applicable, from these deposits. Administration fees, custodial fees and investment counsel fees are deducted from income earned on these deposits.
8. In the case of an education assistance agreement under the Horizon Plan, the Subscriber authorizes the deduction of a management fee from the income earned on these deposits, which includes all administration fees, custodial fees and investment counsel fees. There are no enrolment fees associated with the Horizon Plan.
9. The deposits accumulated over the term of a Plan may be returned to the Subscriber or the Beneficiary upon maturity or termination of the Subscriber’s RESP under the Plan or, in the case of the Protégé Plans, upon discontinuation of the Subscriber’s RESP under a Protégé Plan. The income earned on such deposits is used to provide education assistance payments to the Subscriber’s Beneficiary.
10. Monies deposited by Subscribers to the Plans are invested in accordance with the standard investment restrictions and practices that are contained in National Policy Statement No. 15 - Conditions Precedent to Acceptance of Scholarship or Education Plan Prospectus, and as permitted by the appropriate decision maker in each Jurisdiction. Pursuant to the investment policies adopted by the Foundation, the Plans are currently invested in:
(a) mortgages, where the mortgages are insured under the National Housing Act (Canada);
(b) Government of Canada treasury bills and bonds, debentures and short-term notes issued or guaranteed by federal or provincial governments;
(c) Guaranteed Investment Certificates and other acknowledgments of indebtedness issued by Canadian chartered banks, provincially licensed trust companies or other similar financial institutions (collectively, “Financial Institutions”) whose accounts are normally insured by the Canada Deposit Insurance Corporation or La Régie de l’assurance-depôt du Québec; and
(d) corporate debt securities with an approved credit rating (as defined in Section 1.1. of National Instrument 81-102), subject to the condition that no more than 20% of the income on the Subscribers’ deposits and corresponding Canada Education Savings Grants (the “Grant” is invested in corporate debt securities, and no more than 10% of such income is invested in the debt securities of any one issuer.
11. the Plans’ prospectuses disclose that
(a) each Subscriber will be provided annually a statement of account reflecting, for each Year of Maturity, at the end of the reporting period, the number of Plans outstanding, principal amounts on deposit and accumulated income in the Subscriber’s account, and the corresponding Grant monies and accumulated income thereon;
(b) each Subscriber will be provided with the annual report containing the annual audited financial statements of the Plans administered by the Foundation;
(c) the semi-annual financial statements will be filed at the offices of the Decision Maker in each Jurisdiction where they are available for inspection and that, in addition, these statements are available at the website of the Jurisdictions’ System for Electronic Document Analysis and Retrieval; and
(d) upon request, a Subscriber will be provided a copy of the semi-annual financial statements of the Plans, without charge.
12. The Foundation will send out return cards annually and will maintain a supplementary mailing list in order to take advantage of the exemption from delivering interim financial statements contained in Part IV, Sections 8 and 9 of National Policy Statement No. 41 - Shareholder Communications, in respect of the semi-annual financial statements of the Plans.
AND WHEREAS under the System, this Decision Document evidences the decision of each Decision Maker (the “Decision”);
AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Makers with the jurisdiction to make the Decision has been met;
THE DECISION of the Decision Makers under the Legislation is that each Plan is exempt from the requirement to file with the Decision Makers, and to send to each Subscriber of the Plan interim financial statements for the first and third quarters of the Plan’s financial year, provided that this exemption terminates thirty (30) days after the occurrence of a material change in the affairs of the Plan unless the Foundation satisfies the Decision Makers that the exemption should continue.
DATED this 13th day of September, 2001.
Paul Moore R. Stephen Paddon