Conversion of two ETFs into multi-class corporate fund structure preserves original benefits
Horizons ETFs has taken an additional step in implementing a tax-efficient structure for its ETF offerings.
The firm has completed its reorganization of the Horizons Morningstar Hedge Fund Index ETF (TSC:HHF) and the Horizons Absolute Return Global Currency ETF (TSX:HARC) into Horizons ETF Corp., a multi-class corporate fund structure that already includes several dozen of its ETFs.
The latest reorganization was approved by unitholders at special meetings held last week, and follows a proposal announced in May.
The original benefits offered by the ETFs based on their current investment objectives and strategies have been preserved.
Under the mergers, units of each ETF were exchange on a one-for-one basis for a corresponding number of shares of the equivalent series of Horizons ETF Corp.
The mergers are not anticipated to result in additional taxes for unitholders of the ETFs provided that, in the case of eligible unitholders who hold units of the ETFs in taxable accounts, the unitholders make a joint election with Horizons ETF Corp. under section 85 of the Income Tax Act (Canada) to implement the exchange of their existing trust units for shares of a series of Horizons ETF Corp. take place at the unitholder’s tax cost, plus any reasonable costs of disposition.