AGF Funds Inc. has received an exemption from the mutual fund self-dealing prohibitions and from reporting requirements to allow implementation of fund mergers.

The proposed fund mergers will result in the continuing corporate mutual fund becoming the sole holder of all units of the merging trust fund until the trust fund can be wound up in a tax-efficient manner.

The Ontario Securities Commission received an application from AGF as manager of AGF European Growth Class and AGF U.S. Value Class, seeking relief from various restrictions relating to the funds’ holdings in the Global Strategy Europe Plus Fund and Global Strategy U.S. Equity Fund.

AGF proposed the merger of Global Strategy Europe Plus Fund into AGF European Growth Class and of Global Strategy U.S. Equity Fund into AGF U.S. Value Class.

The mergers were approved at unitholder meetings on May 15. The mergers will be implemented by giving the GS funds’ unitholders the opportunity on December 15, to either exchange their units for shares in the AGF funds, or for cash.

Without the exemption, each AGF Fund would be required to divest itself of the units of the corresponding GS fund acquired in the mergers. Also, AGF would be required to file a report on every purchase or sale of securities of the GS funds by the AGF funds.

The OSC granted relief, as long as:

  1. the investment by the AGF funds in the GS funds is compatible with the fundamental investment objectives of the AGF funds;
  2. the simplified prospectus of the funds discloses details of the mergers;
  3. there are compatible dates for the calculation of the net asset value of both groups of the funds for the purpose of the issue and redemption of securities;
  4. no sales charges are payable by the AGF funds; and
  5. no redemption fees or other charges are charged by the GS funds.