Ontario Securities Commission
November 30, 2022
In the Matter of the Securities Legislation of Ontario (the Jurisdiction)
and
In the Matter of the Process for Exemptive Relief Applications in Multiple Jurisdictions
and
In the Matter of CI Investments Inc. (CI)
and the Top Funds (as defined below)
Decision
Background
The principal regulator in the Jurisdiction has received an application (the Application) from CI and its affiliates (collectively, the Filer), on behalf of investment funds managed by the Filer subject to National Instrument 81-102 Investment Funds (NI 81-102) and National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) (the Existing Public Top Funds) and investment funds managed by the Filer that are not reporting issuers subject to NI 81-102 and NI 81-107 (the Existing Private Top Funds) and any future investment funds managed by the Filer that are, or will be, reporting issuers subject to NI 81-102 and NI 81-107 (the Future Public Top Funds, and together with the Existing Public Top Funds, the Public Top Funds) or are not, or will not be, reporting issuers subject to NI 81-102 and NI 81-107 (the Future Private Top Funds, together with the Existing Private Top Funds, the Private Top Funds, and the Private Top Funds together with the Public Top Funds, the Top Funds). The Filer intends for one or more of the Top Funds, as appropriate, to invest a portion of its assets, directly or indirectly through a CI Look-Through Fund (as defined below), in CI Global Private Real Estate Fund (the Real Estate Fund) or in CI Adams Street Global Private Markets Fund (the Private Equity Fund and together with the Real Estate Fund, the Initial Underlying Investments) and/or in any other future collective investment scheme that is, or will be, managed by the Filer, an associate of CI (a CI Associate) or an Unrelated Manager (as defined below) that will have non-traditional investment strategies (the Future Underlying Investments and, together with the Initial Underlying Investments, the Underlying Investments) and therefore has applied for a decision under the securities legislation of the Jurisdiction (the Legislation):
- exempting the Top Funds, including each CI Look-Through Fund (as defined below), from the restriction in the Legislation which prohibits:
(a) an investment fund from knowingly making an investment in a person or company in which the investment fund, alone or together with one or more related investment funds, is a substantial security holder
(b) an investment fund from knowingly making an investment in an issuer in which
i. any officer or director of the investment fund, its management company or distribution company or an associate of any of them or
ii. any person or company who is a substantial security holder of the investment fund, its management company or its distribution company
has a significant interest and
(c) an investment fund, its management company or its distribution company from knowingly holding an investment described in paragraph (a) or (b) above (collectively, the Related Issuer Relief);
exempting the Filer when it wishes to cause a Top Fund, directly or through a CI Look-Through Fund (as defined below), to invest in an Underlying Investment managed by the Filer or a CI Associate from the restriction in paragraph 13.5(2)(a) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) that prohibits a registered adviser from knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as adviser, to invest in securities of any issuer in which a responsible person or an associate of a responsible person is a partner, officer or director, unless the fact is disclosed to the client and the written consent of the client to the investment is obtained before the purchase (the Consent Requirement Relief);
exempting the Filer, with respect to the Top Funds, including the CI Look-Through Funds (as defined below), from the requirement to prepare a report in accordance with the requirements of the Legislation of every transaction of purchase of securities from or sale of securities to any related person or company (the Reporting Relief);
exempting the Public Top Funds from the prohibition in paragraphs 2.5(2)(a), (a.1), (b), (c) of NI 81-102 to permit the Public Top Funds to invest in a CI Look-Through Fund (as defined below), subject to compliance with paragraphs 2.5(2)(d), (e) and (f) with respect to those investments (the Fund on Fund Relief); and
revoking the Original Decision (as such term is defined below) (the Revocation).
The Related Issuer Relief, the Consent Requirement Relief, the Reporting Relief, the Fund on Fund Relief and the Revocation are collectively, the Exemption Sought.
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for the Application; and
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Québec, Prince Edward Island, Saskatchewan and Yukon (together with Ontario, the Jurisdictions).
Interpretation
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts represented by the Filer:
The Filer
CI is a corporation with its head office located in Toronto, Ontario.
CI is registered
(a) under the securities legislation of all provinces and territories of Canada as a portfolio manager
(b) under the securities legislation of Ontario, Québec, and Newfoundland and Labrador as an investment fund manager
(c) under the securities legislation of all provinces and territories of Canada as an exempt market dealer and
(d) under the Commodity Futures Act (Ontario) as a commodity trading counsel and a commodity trading manager.
The Filer is the investment fund manager (each, an IFM) and portfolio manager of the Existing Public Top Funds and the Existing Private Top Funds (together, the Existing Top Funds) and the Filer will be the IFM and portfolio manager of the Future Public Top Funds and the Future Private Top Funds (together, the Future Top Funds). To the extent that the Filer is the IFM and portfolio manager of any Future Top Fund, the representations set out in this decision will apply to the same extent to such Future Top Fund.
CI will be the IFM and the portfolio manager of each CI Look-Through Fund (as defined below). The representations set out in this decision will apply to the same extent to each CI Look-Through Fund established in the future.
CI is also the manager and portfolio manager of the Initial Underlying Investments and the Filer or a CI Associate may be the manager and portfolio manager of the Future Underlying Investments. In addition, a manager that is not the Filer or a CI Associate (an Unrelated Manager) may also be such a manager and portfolio manager. To the extent that the Filer, a CI Associate or an Unrelated Manager is the manager and portfolio manager of any Future Underlying Investment, the representations set out in this decision will apply to the same extent to such Future Underlying Investment.
The Filer is, or will be, a "responsible person" of each Top Fund, each CI Look-Through Fund (as defined below) and each Initial Underlying Investment as that term is defined in NI 31-103. The Filer or a CI Associate will be a "responsible person" of each Future Underlying Investment, other than a Future Underlying Investment managed by an Unrelated Manager. Since the Filer or a CI Associate is, or will be, the manager of each Underlying Investment, other than an Underlying Investment managed by an Unrelated Manager, the Filer acts, or will act in a capacity in relation to the Underlying Investment similar to a "partner, officer or director" of the Underlying Investment, as contemplated in paragraph 13.5(2)(a) of NI 31-103.
CI and its Canadian affiliates are not in default of securities legislation in any Jurisdiction.
The Top Funds
The securities of each Public Top Fund are, or will be, qualified for distribution in one or more of the Jurisdictions and distributed to investors pursuant to a simplified prospectus, an annual information form, prospectus, ETF Facts, and/or Fund Facts, prepared in accordance with National Instrument 41-101 General Prospectus Requirements or National Instrument 81-101 Mutual Fund Prospectus Disclosure, as applicable. Each Public Top Fund is, or will be, a reporting issuer under the securities legislation of one or more Jurisdictions.
The securities of each Private Top Fund are, or will be, distributed solely to investors pursuant to exemptions from the prospectus requirements in accordance with National Instrument 45-106 Prospectus Exemptions (NI 45-106) and the Legislation. Each Private Top Fund has, or will have, an offering memorandum or statement of investment policies and guidelines, which is provided to investors. None of the Private Top Funds are, or will be, reporting issuers under the securities legislation of any Jurisdiction.
Each Top Fund may wish to invest in securities of the Underlying Investments, directly or indirectly through a CI Look-Through Fund (as defined below), and, as a result, the Filer is seeking the Exemption Sought in order to permit the Top Fund to make these investments. A Top Fund may wish to so invest directly or indirectly, provided the investment or investments is consistent with the Top Fund's investment objectives and strategies.
The Existing Top Funds are not in default of the securities legislation of any Jurisdiction.
Each Public Top Fund is subject to NI 81-107 and the Filer has established an independent review committee (an IRC) in order to review conflict of interest matters pertaining to its management of the Public Top Funds as required by NI 81-107.
The Underlying Investments
The Initial Underlying Investments are collective investment schemes that are established as open-ended trusts under the laws of Ontario. Future Underlying Investments may be structured as limited partnerships, trusts or corporations governed by the laws of a jurisdiction of Canada or the United States, and in certain cases, a tax-neutral jurisdiction, as is typically the case for collective investment vehicles providing exposure to non-traditional asset classes.
The Underlying Investments are not, or will not be, reporting issuers in any of the Jurisdictions. Securities of the Initial Underlying Investments are, and any Future Underlying Investment will be, distributed solely to investors in Canada pursuant to exemptions from the prospectus requirements in accordance with NI 45-106 and the Legislation. Each Initial Underlying Investment has, or will have, an offering memorandum which is provided to investors.
Each Underlying Investment provides, or will provide exposure to non-traditional asset classes, such as real estate, private equity, venture capital and private credit.
The investment objective of the Real Estate Fund is to provide exposure to (i) the returns of the CBRE Global Investment Partners Global Alpha Fund (the Global Alpha Sub-Fund) or (ii) a selection of real estate investments selected by CBRE Global Investment Partners Limited or an affiliate in a manner that is generally consistent with the investment objectives, strategies and restrictions of the Global Alpha Sub-Fund. To achieve its investment objective, the Real Estate Fund will initially obtain exposure to the Global Alpha Sub-Fund by investing the net proceeds from subscriptions for units in an Irish corporation that will subscribe for units of the Global Alpha Sub-Fund. The Global Alpha Sub-Fund seeks to acquire a selection of investments, which together provide well-diversified exposure across global real estate markets, with the objective of generating a nominal total return over a market cycle of between 9% and 11% per annum in local currency net of its management fee and organizational and operational expenses. The Global Alpha Sub-Fund targets a distribution yield to investors of 5% per annum through direct and indirect investments in real estate and real estate-related assets in Europe, the Americas and the Asia Pacific region.
The investment objective of the Private Equity Fund is to seek attractive long-term capital appreciation through an evergreen investment structure by obtaining exposure to a globally diversified portfolio of private equity and private debt investments. To achieve its investment objective, the Private Equity Fund invests in a Cayman Islands exempted limited partnership master fund (Master Fund) through a Cayman Islands exempted company feeder fund. The feeder fund was established by Adams Street Partners, LLC (ASP Manager) for the purposes of investing in the Master Fund. ASP Manager acts as investment manager of the Master Fund.
The Underlying Investments are not, or will not be, investment funds as such term is defined under Canadian securities legislation. The Underlying Investments are, or will be, managed by the Filer, a CI Associate or an Unrelated Manager, as manager. The Filer may wish to have the Top Funds, directly or indirectly through a CI Look-Through Fund (as defined below), and each CI Look-Through Fund invest in Underlying Investments managed by the Filer, a CI Associate or an Unrelated Manager to an extent beyond that permitted by the Legislation, including as contemplated by the Related Issuer Relief.
The underlying assets to which the Underlying Investments will have exposure are and will be operated by entities that are at arms-length to the Filer and any CI Associate. The manager of the Underlying Investments, calculates, or will calculate, a net asset value (NAV) that will be used for the purposes of determining the purchase and redemption price of the securities of the Underlying Investments.
The value of the underlying portfolio assets of the Real Estate Fund is independently determined by CB Richard Ellis Group, Inc. or its affiliates, all of whom are at arm's length to the Filer, the Real Estate Fund, and the other Underlying Investments, on a quarterly basis. The value of the underlying portfolio assets of the Private Equity Fund will be independently determined by ASP Manager or its affiliates, all of whom are at arm's length to the Filer, the Private Equity Fund and the other Underlying Investments on a quarterly basis.
The manager of a Future Underlying Investment will determine the value of the underlying portfolio assets of the Future Underlying Investment on an at least quarterly basis. Consistent with the Initial Underlying Investments, if the Filer or a CI Associate is the manager of a Future Underlying Investment, that manager will base its valuation of the Future Underlying Investment on valuations of the underlying portfolio assets of that Future Underlying Investment that are independently determined by an entity that is at arm's length to the Filer and the Future Underlying Investment. Neither the Filer nor a CI Associate will have any involvement in the valuation of a Future Underlying Investment managed by an Unrelated Manager.
Each Underlying Investment produces, and will produce, audited financial statements on an annual basis, prepared in accordance with accounting principles generally accepted in Canada, the United States or a tax-neutral country, as applicable to the Underlying Investment, with an auditing firm that is qualified to so act in Canada, the United States or a tax-neutral country, as applicable, as the auditor of those financial statements. The Filer will have access to audited financial statements prepared by the Underlying Investments.
Neither of the Initial Underlying Investments is in default of the securities legislation of any Jurisdiction.
No Top Fund or a CI Look-Through Fund (as defined below) will actively participate in the business or operations of an Underlying Investment.
Investments by the Top Funds in the Initial Underlying Investments and Future Underlying Investments (as such term was defined in the Original Decision referred to immediately below) were the subject of an exemption similar to the Exemption Sought dated December 29, 2020 (the Original Decision). The Exemption Sought revokes the Original Decision and replaces it with this decision, given that the Original Decision only included Underlying Investments that were managed by the Filer and were established in Canada. The Exemption Sought permits investments by the Top Funds in Future Underlying Investments that include Underlying Investments established outside Canada and that are managed by CI Associates and Unrelated Managers, in addition to affiliates of CI and CI itself. The Exemption Sought also permits indirect investments by the Top Funds in Underlying Investments through investments in a CI Look-Through Fund (as defined below) and permits a CI Look-Through Fund to invest in Underlying Investments.
Investments by Top Funds in the Underlying Investments (directly or indirectly through a CI Look-Through Fund)
CI may establish private investment funds that will invest in one or more Underlying Investments. These private investment funds are referred to in this decision as CI Look-Through Funds. The CI Look-Through Funds may also invest in fixed income securities, listed equity securities, investment funds and/or exchange-traded funds, including investment funds managed by the Filer, for cash management purposes. CI will establish a CI Look-Through Fund, as it determines appropriate to allow for more efficient management of the Underlying Investments, including the management of liquidity, capital calls and distributions associated with the Underlying Investments. The Filer may cause one or more of the Top Funds to invest in the Underlying Investments indirectly through an investment in a CI Look-Through Fund.
An investment by a Top Fund in an Underlying Investment, directly or indirectly through a CI Look-Through Fund, will only be made if the investment is, or will be, compatible with the investment objectives of the Top Fund and allows, or will allow, the Top Fund to obtain exposure to asset classes in which the Top Fund may otherwise invest directly. The Filer believes that the investment by a Top Fund in an Underlying Investment, directly or indirectly through a CI Look-Through Fund, will provide the Top Fund with an efficient and cost-effective manner of pursuing portfolio diversification and asset diversification instead of purchasing securities or the underlying assets of each Underlying Investment, directly. The Top Fund will gain access to the investment expertise of the portfolio adviser of each Underlying Investment, as well as to their investment strategies and asset classes.
Investments by a Top Fund in an Underlying Investment, directly or indirectly through a CI Look-Through Fund, will be effected at an objective price. The Filer's policies and procedures provide that an objective price, for this purpose, will be the NAV per security of the applicable class or series of the Underlying Investment or CI Look-Through Fund.
Each Public Top Fund is, or will be, valued and redeemable daily, while each Private Top Fund is or will be valued and redeemable either daily or on a weekly basis, and the Underlying Investments, including the CI Look-Through Funds, may be potentially subject to lock-up periods, early redemption penalties, and limitations on redemptions depending on the amounts being redeemed. A Top Fund will not invest in an Underlying Investment, directly or indirectly through a CI Look-Through Fund, unless the portfolio manager of the Top Fund believes that the liquidity of the Top Fund's portfolio is adequately managed through other strategies.
Generally
The amount invested from time to time in an Underlying Investment or a CI Look-Through Fund, by a Top Fund, together with one or more other Top Funds, may exceed 20% of the outstanding voting securities of the Underlying Investment or CI Look-Through Fund. This may result by reason of a group of Top Funds providing initial investments into the Underlying Investment or CI Look-Through Fund on the start-up of the Underlying Investment or CI Look-Through Fund or as the Underlying Investment or CI Look-Through Fund winds down. As a result, each Top Fund could, together with one or more other Top Funds, become a "substantial security holder" of an Underlying Investment or CI Look-Through Fund within the meaning of section 110 of the OSA and contrary to section 111(2)(b) of the OSA. The Top Funds are, or will be, "related investment funds", as such term is defined in section 106(1) of the OSA by virtue of common management by the Filer.
In addition, from time to time, an officer or director of the Filer may have a "significant interest" in an Underlying Investment or a CI Look-Through Fund and/or a person or company who is a substantial security holder of the Top Fund, in which case the Filer may have a "significant interest" in the Underlying Investment or CI Look-Through Fund within the meaning of section 110 of the OSA, which, under section 111(2)(c) would prohibit the Top Funds from investing in the Underlying Investment or CI Look-Through Fund.
Since the Underlying Investments are not reporting issuers and are not "investment funds" pursuant to Canadian securities legislation, they are not subject to NI 81-102 and therefore the Top Funds are unable to rely upon the exemptions codified under NI 81-102 for investments by investment funds in other investment funds. Further, since the CI Look-Through Funds are not reporting issuers, the Public Top Funds are unable to rely upon the aforementioned exemptions when making investments in the CI Look-Through Funds. The Private Top Funds are unable to rely upon the aforementioned exemptions due to, among other things, the Private Top Funds and CI Look-Through Funds having different redemption and valuation dates.
In the absence of the Related Issuer Relief and the Fund on Fund Relief, as applicable, each Top Fund would be limited by the investment restrictions in the Legislation in terms of the extent to which they could invest in the Underlying Investments, directly or indirectly through a CI Look-Through Fund. Specifically, a Top Fund would be prohibited from (i) becoming a substantial security holder of an Underlying Investment or a CI Look-Through Fund together with other Top Funds and (ii) investing in an Underlying Investment or a CI Look-Through Fund in which an officer or director of the Filer has a significant interest or in which a person or company who is a substantial security holder of the Top Fund or the Filer, has a significant interest.
The action of the Filer in causing a Top Fund to invest in an Underlying Investment or in a CI Look-Through Fund, would require disclosure to the "client" and the prior written consent of the "client" to the investment. Paragraph 13.5(2)(a) of NI 31-103 prohibits these investments in these circumstances given that the Filer or a CI Associate manages the Underlying Investment and CI manages the CI Look-Through Fund, and hence acts in a capacity similar to a "partner, director or officer" and the Filer is a responsible person of the Top Funds. This prohibition does not apply to investments by the Top Funds in the Underlying Investments managed by Unrelated Managers.
According to the Legislation, every management company shall, in respect of each investment fund to which it provides services or advice, file a report of every transaction of purchase or sale of securities between the investment fund and any related person or company within 30 days after the end of the month in which it occurs.
In the absence of the Reporting Relief, the Filer, acting as the management company (as defined in the applicable securities laws) of the Top Funds and the CI Look-Through Funds, as applicable, would be required to file a report of every purchase and sale of securities by the Top Funds or CI Look-Through Funds, as applicable, of the Underlying Investments or CI Look-Through Funds, as applicable, managed by the Filer or every purchase or sale effected by the Top Funds through any related person or company with respect to which the related person or company received a fee either from the Top Funds or from the other party to the transaction or from both within 30 days after the end of the month in which such purchase or sale occurs (the Reporting Requirement).
It would be costly and time-consuming for the Top Funds and the CI Look-Through Funds to comply with the Reporting Requirement.
National Instrument 81-106 Investment Fund Continuous Disclosure requires the Public Top Funds to prepare and file annual and interim management reports of fund performance that include a discussion of transactions involving related parties to the Public Top Funds. Such disclosure is similar to that required under the Reporting Requirement and fulfills its objective to inform the general public about the transactions involving related parties to the Public Top Funds.
Subsection 6.2(3) of NI 81-107 provides an exemption for investment funds from the "investment fund conflict of interest investment restrictions" (as defined in NI 81-102) for purchases of related issuer securities if the purchase is made on an exchange. However, NI 81-107 does not apply to the Private Top Funds and the exemption in subsection 6.2(3) of NI 81-107 does not apply to purchases of non-exchange-traded securities and therefore does not apply to purchases of an Underlying Investment, directly or indirectly through a CI Look-through Fund, by a Public Top Fund.
A Top Fund's investment, directly or indirectly through a CI Look-Through Fund, in an Underlying Investment will represent the business judgment of a responsible person uninfluenced by considerations other than the best interests of the Top Fund.
Decision
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:
(a) securities of the Private Top Funds are distributed in Canada solely to investors pursuant to exemptions from the prospectus requirements in NI 45-106 or the Legislation;
(b) an investment by a Top Fund in an Underlying Investment, directly or indirectly through a CI Look-Through Fund, will be compatible with the investment objective and strategy of such Top Fund and, each Top Fund, including each Private Top Fund, will comply with the investment restrictions and practices provided for in Part 2 of NI 81-102 in making such investments, in particular, the concentration restriction provided for in section 2.1, the control restriction provided for in section 2.2 and the illiquid assets restriction in section 2.4. Each Top Fund will treat securities of the Underlying Investments and of a CI Look-Through Fund as illiquid assets for these purposes. Each Top Fund, investing indirectly in an Underlying Investment, through a CI Look-Through Fund, will not invest more than 10% of its NAV, at the time of purchase, in securities of a CI Look-Through Fund;
(c) at the time of the purchase by a Top Fund or a CI Look-Through Fund of securities of an Underlying Investment, either the Underlying Investment holds no more than 10% of its NAV in securities of other investment funds or the Underlying Investment:
(i) has adopted a fundamental investment objective to track the performance of another investment fund or similar investment product;
(ii) purchases or holds securities of investment funds that are "money market funds" (as such term is defined in NI 81-102); or
(iii) purchases or holds securities that are "index participation units" (as such term is defined in NI 81-102) issued by an investment fund;
(d) in respect of an investment by a Top Fund in an Underlying Investment, directly or indirectly though a CI Look-Through Fund, no sales or redemption fees will be paid as part of the direct or indirect investment in the Underlying Investment, unless the Top Fund redeems its securities of an Underlying Investment, held directly or indirectly through a CI Look-Through Fund, during a lock-up period, in which case an early redemption fee may be payable by the Top Fund;
(e) in respect of an investment by a Top Fund in an Underlying Investment, directly or indirectly through a CI Look-Through Fund, no management fees or incentive fees will be payable by the Top Fund that, to a reasonable person, would duplicate a fee payable by an Underlying Investment or CI Look-Through Fund, for the same service;
(f) the securities of an Underlying Investment managed by the Filer or a CI Associate or a CI Look-Through Fund held by a Top Fund will not be voted at any meeting of the security holders of the Underlying Investment or CI Look-Through Fund, except that the Top Fund may arrange for the securities of the Underlying Investment or CI Look-Through Fund it holds to be voted by the beneficial holders of securities of the Top Fund;
(g) where applicable, a Public Top Fund's investment in an Underlying Investment, directly or through a CI Look-Through Fund will be disclosed to investors in such Public Top Fund's quarterly portfolio holding reports and financial statements;
(h) where applicable, a Public Top Fund's investment in an Underlying Investment and in a CI Look-Through Fund will be disclosed to investors in such Public Top Fund in fund facts or ETF Facts, as applicable;
(i) the prospectus of a Public Top Fund discloses, or will disclose in the next renewal or amendment thereto following the date of a decision evidencing the Exemption Sought, the fact that the Public Top Fund may invest in an Underlying Investment, directly or indirectly through a CI Look-Through Fund and will refer to the nature of the relationships between the Filer and the managers of the Underlying Investments and the CI Look-Through Fund, as applicable;
(j) the offering memorandum or statement of investment policies and guidelines, where available, or other disclosure document of a Private Top Fund, will be provided to each new investor in a Private Top Fund prior to their purchase of securities of the Private Top Fund, and will disclose the following information at the next update of such document:
(i) that the Private Top Fund may purchase securities of one or more Underlying Investments, directly or indirectly through a CI Look-Through Fund;
(ii) the fact that the Filer is the IFM of the Private Top Fund and it or a CI Associate is also the manager of the Underlying Investments and CI is the manager of the CI Look-Through Funds, as applicable;
(iii) that the Filer does not anticipate that any fees or sales charges would be incurred, directly or indirectly, by the Private Top Fund with respect to an investment in an Underlying Investment, directly or indirectly through a CI Look-Through Fund, that, to a reasonable person, would duplicate a fee payable by the Private Top Fund to the Filer or its investors; and
(iv) that the Private Top Fund will comply with the investment restrictions and practices provided for in Part 2 of NI 81-102 in making such investments, in particular, the concentration restriction provided for in section 2.1, the control restriction provided for in section 2.2 and the illiquid assets restriction in section 2.4;
(k) the IRC of each Public Top Fund will review and provide its approval, including by way of standing instructions, prior to the purchase of an Underlying Investment, directly or indirectly through a CI Look-Through Fund, by the Public Top Fund, in accordance with section 5.2(2) of NI 81-107;
(l) the Filer complies with section 5.1 of NI 81-107 and the Filer and the IRC of each Public Top Fund will comply with section 5.4 of NI 81-107 for any standing instructions the IRC provides in connection with the transactions;
(m) if the IRC becomes aware of an instance where the Filer, in its capacity as manager of a Public Top Fund, did not comply with the terms of this decision, or a condition imposed by securities legislation or the IRC in its approval, the IRC of the Public Top Fund will, as soon as practicable, notify in writing the securities regulatory authority or regulator in the jurisdiction under which the Public Top Fund is organized;
(n) where an investment is made by a Public Top Fund, directly or indirectly through a CI Look-Through Fund, in an Underlying Investment that is managed by the Filer or a CI Associate, the annual and interim management reports of fund performance for the Public Top Fund will disclose the name of the related person in which an investment is made, being the Underlying Investment;
(o) where an investment is made by a Top Fund, directly or indirectly through a CI Look-Through Fund, in an Underlying Investment that is managed by the Filer or a CI Associate, the records of portfolio transactions maintained by the Top Fund include, separately for every portfolio transaction effected by a Top Fund by the Filer, the name of the related person in which an investment is made, being the Underlying Investment;
(p) a Top Fund will invest in, and redeem, each Underlying Investment, held directly or indirectly through a CI Look-Through Fund, at the NAV of the applicable securities of the Underlying Investment or the CI Look-Through Fund, which will be based on the valuation of the applicable portfolio assets to which the Underlying Investment has exposure, determined independently from the Filer or any CI Associate, as applicable, as contemplated in recital 21 above; and
(q) any Underlying Investment that a Top Fund invests in directly, or indirectly through a CI Look-Through Fund, will provide the Filer with audited annual financial statements as contemplated in recital 22 above.
"Darren McKall"
Darren McKall
Manager, Investment Funds and Structured Products Branch
Ontario Securities Commission
Application #2022/0351