Regulation 4801

In response to a query as to "whether a mutual fund trust's status under the...ITA...would be adversely affected if the Ontario Securities Commission (the "Commission")...refused to issue a receipt for any prospectus filed with the Commission following the filing of an earlier prospectus which had been accepted by the Commission, CRA stated:

...a distribution of units of a class in accordance with the initial prospectus accepted by the Commission would satisfy the essential requirement of paragraph 4803(2)(a) of the Regulations such that the class of units so distributed would be qualified for distribution to the public. The fact that subsequent events preclude the trust from issuing any further units of that class to new or existing unitholders does not alter the fact that a lawful distribution of units of that class has previously been made in accordance with a properly receipted prospectus.

Please note that it is currently proposed that for trusts created after 1999, paragraph 4801(a) of the Regulations be amended to permit a trust that does not have a class of units which are qualified for distribution to the public to qualify as a mutual fund trust if there has been a lawful distribution in a province to the public of units of the trust and a prospectus, registration statement or similar document was not required under the laws of the province to be filed in respect of the distribution, and the other conditions necessary to qualify as a mutual fund trust are met.

For the purposes of the 20-shareholder test in s. 130.1(6)(d), an individual and he individual's RRSP and TFSA trusts would each count as a separate shareholder unless s. 104(2) was applied.