CIBC Asset Management Inc. and The Top Funds

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from concentration restriction in subsection 2.2(1.1) of NI 81-102 to permit investment funds to invest in underlying issuer due to relative size disparity -- top funds will only hold non-voting securities, and underlying investment is unrelated to the filer or the top funds -- relief subject to conditions.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 2.2(1.1), 19.1.

June 23, 2025

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
CIBC ASSET MANAGEMENT INC.
(the Filer)

AND

THE TOP FUNDS
(as defined below)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of each of the Filer, the Filer's affiliates and the Top Funds (as defined below) for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption from subsection 2.2(1) (the Control Restriction) of National Instrument 81-102 Investment Funds in order to permit a Top Fund to purchase securities of the Underlying Investment (as defined below) even if immediately after the purchase, a Top Fund would hold securities representing more than 10% of the outstanding equity securities of the Underlying Investment (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 subsection 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 the Jurisdiction, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions, NI 81-102 and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Existing Top Funds means each investment fund managed by the Filer or an affiliate as at date of the decision granting the Exemption Sought that is a reporting issuer subject to NI 81-102.

Future Top Funds means each investment fund, other than the Existing Top Funds, that will be managed by the Filer or an affiliate after the date of the decision granting the Exemption Sought and that will be a reporting issuer subject to NI 81-102.

Top Funds means the Existing Top Funds and the Future Top Funds.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation amalgamated under the federal laws of Canada with its head office located in Toronto, Ontario.

2. The Filer is registered in: (i) each of the Jurisdictions as an adviser in the category of portfolio manager (PM) and as a dealer in the category of exempt market dealer; (ii) Ontario, Québec and Newfoundland and Labrador in the category of investment fund manager (IFM); (iii) Ontario in the category of commodity trading manager; and (iv) Québec as a derivatives portfolio manager.

3. The Filer or an affiliate of the Filer is, or will be, the IFM of the Top Funds. To the extent that the Filer or an affiliate of the Filer is the IFM of any Future Top Fund, the representations set out in this decision will apply to the same extent to such Future Top Fund.

4. The Filer is not in default of securities legislation in any of the Jurisdictions.

The Top Funds

5. The securities of each Top Fund are, or will be, distributed to investors pursuant to a prospectus prepared in accordance with National Instrument 41-101 General Prospectus Requirements or National Instrument 81-101 Mutual Fund Prospectus Disclosure, as applicable.

6. The securities of each Top Fund are, or will be, qualified for distribution in one or more Jurisdictions.

7. Each Top Fund is, or will be, a reporting issuer under the securities legislation of one or more Jurisdictions.

8. Each Top Fund may wish to invest in securities of the Underlying Investment, provided the investment is consistent with the Top Fund's investment objectives and strategies.

9. The Existing Top Funds are not in default of securities legislation of any of the Jurisdictions.

The Underlying Investment

10. The Underlying Investment will be an unincorporated open-end investment trust governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein. The Filer anticipates that the Underlying Investment will launch before the end of July 2025.

11. The Underlying Investment will be managed by Starlight Investments CDN AM Group LP (the Underlying Investment Manager).

12. A corporate trustee will act as the trustee of the Underlying Investment.

13. The Underlying Investment will not be subject to NI 81-102 and will not be considered to be an "investment fund" as such term is defined under the Legislation. Units of the Underlying Investment will be sold pursuant to exemptions from the prospectus requirements in accordance with National Instrument 45-106 Prospectus Exemptions (NI 41-106) or the Legislation, as applicable. Each such investor will be responsible for making its own investment decisions regarding its purchases and/or redemptions of units of the Underlying Investment.

14. The Underlying Investment will have an offering memorandum which is provided to investors.

15. The investment objective of the Underlying Investment will be to achieve long-term income and capital appreciation by investing, directly or indirectly in a diversified portfolio of high-quality core income-producing multi-family residential properties in Canada's largest metropolitan areas.

16. The Underlying Investment will produce audited financial statements on an annual basis, in accordance with generally accepted accounting principles with a qualified auditing firm as the auditor of those financial statements.

17. The net asset value per unit of the Underlying Investment will be determined by the Underlying Investment Manager on a quarterly basis. Approximately 25% of the portfolio assets of the Underlying Investment will be externally appraised by qualified independent appraisers each quarter, with portfolio assets being selected for appraisal on a rotating basis such that 100% of the assets held in the Underlying Investment's portfolio are appraised at least once annually.

18. As the Underlying Investment has not yet been formed, it is not in default of securities legislation of any of the Jurisdictions.

General

19. The Top Funds will purchase non-voting securities of the Underlying Investment on the formation/initial offering of securities of the Underlying Investment.

20. No Top Fund will actively participate in the business or operations of the Underlying Investment.

21. The Filer believes that an investment by a Top Fund in the Underlying Investment will provide the Top Fund with an efficient and cost-effective manner of obtaining exposure to multi-family residential real estate in Canada.

22. The Filer believes that an allocation to private multi-family residential real estate through investment in the Underlying Investment is in the best interests of the Top Funds, will provide Top Fund investors with unique opportunities to gain exposure to Canadian multi-family residential real estate and represents an appropriate investment tool for the Top Funds.

23. Investments by a Top Fund in the Underlying Investment will be effected at an objective price being the net asset per unit of the applicable class or series of the Underlying Investment.

24. Each Top Fund is, or will be, valued and redeemable daily. The Underlying Investment will be subject to redemption limitations, including lock-up periods and early redemption penalties (collectively, Redemption Limitations).

25. An investment by a Top Fund in the Underlying Investment will only be made if such investment represents the business judgment of a responsible person uninfluenced by considerations other than the best interests of that Top Fund.

26. A Top Fund will not invest in the Underlying Investment for the purpose of exercising control over, or management of, the Underlying Investment. The securities of the Underlying Investment that would be held by the Top Funds will be non-voting and will not provide a Top Fund with any right to (a) appoint directors or observers to any board of the Underlying Investment or the Underlying Investment Manager, (b) restrict management of the Underlying Investment or be involved in the decision-making with respect to the investments made by the Underlying Investment, (c) restrict the transfer of securities of the Underlying Investment by other investors in the Underlying Investment or (d) otherwise participate in the decision-making process associated with the investments made by the Underlying Investment.

27. The Top Funds will not have any look-through rights with respect to the individual portfolio investments held by the Underlying Investment. Further, the Top Funds will not have any rights to, or responsibility for, administering any of the portfolio investments held by the Underlying Investment.

28. The Underlying Investment, following the completion of its initial investment period, will be subject to certain diversification requirements which include limiting the indirect exposure of the Top Funds to any single property.

29. Investments by a Top Fund in the Underlying Investment will not qualify for the exemption from the Control Restriction in paragraph 2.2(1.1)(a) of NI 81-102 as the Underlying Investment will not be an "investment fund" subject to NI 81-102.

30. The Filer does not anticipate that any fees or sales charges would be incurred, directly or indirectly, by a Top Fund with respect to an investment in the Underlying Investment that, to a reasonable person, would duplicate a fee payable by the Top Fund to the Filer or by its investors.

31. In respect of an investment by a Top Fund in the Underlying Investment, no management fees or incentive fees will be payable by a Top Fund that, to a reasonable person, would duplicate a fee payable by the Underlying Investment for the same service.

32. A Top Fund's investment in the Underlying Investment will be disclosed to investors in that Top Fund's quarterly portfolio holding reports, financial statements, and fund facts or ETF facts documents, as applicable.

33. Securities of the Underlying Investment will be considered an "illiquid asset" within the meaning of NI 81-102. Consequently, if the Exemption Sought is granted, a Top Fund will acquire securities of the Underlying Investment, subject to the illiquid asset restriction in Section 2.4 of NI 81-102. As a result, a Top Fund will not purchase securities of the Underlying Investment if immediately after purchase, more than 10% of the net asset value of the Top Fund would be made up of "illiquid assets".

34. The prospectus of each Top Fund will disclose in the next renewal or amendment thereto following the date of the decision granting the Exemption Sought, the fact that the Top Fund may invest, directly or indirectly, in the Underlying Investment in excess of the Control Restriction on the basis provided for in any decision document granting the Exemption Sought.

35. Absent the Exemption Sought, each Top Fund would be prohibited by subsection 2.2(1)(a)(ii) of NI 81-102 from purchasing a security of the Underlying Investment if immediately after the purchase, the Top Fund would hold securities representing more than 10% of the outstanding equity securities of the Underlying Investment. Due to the expected size disparity between a Top Fund and the Underlying Investment, with the Top Fund expected to be significantly larger than the Underlying Investment, it is likely that a relatively small investment, on a percentage of net asset value basis, by a relatively larger Top Fund in the Underlying Investment could result in the Top Fund holding securities representing more than 10% of the outstanding equity securities of the Underlying Investment, contrary to the Control Restriction.

36. Investments in the Underlying Investment will be considered illiquid investments under NI 81-102 and, therefore, would not be permitted to exceed 10% of the net asset value of a Top Fund. Such investments would be included as part of the calculation for the purposes of the illiquid asset restriction in section 2.4 of NI 81-102 for a Top Fund. Given the readily available liquidity of the remainder of each Top Fund's investment portfolio, the Filer believes that the risk of a Top Fund needing to liquidate its investment in these illiquid assets when markets are under stress or in other environments where liquidity may be reduced is remote.

37. A Top Fund's investment in the 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) the securities of the Underlying Investment, if distributed in Canada, are distributed in Canada solely to accredited investors pursuant to exemptions from the prospectus requirement under NI 45-106 or the Legislation, as applicable;

(b) a direct or indirect investment by a Top Fund in the Underlying Investment is compatible with the investment objective and strategy of such Top Fund and included as part of the calculation for the purposes of the illiquid asset restriction in section 2.4 of NI 81-102 for a Top Fund;

(c) no sales or redemption fees will be paid as part of the investment by a Top Fund in the Underlying Investment, unless the Top Fund redeems its securities of the Underlying Investment during a Redemption Limitation, in which case a fee may be payable by the Top Fund;

(d) no management fees or incentive fees will be payable by a Top Fund that, to a reasonable person, would duplicate a fee payable by the Underlying Investment for the same service;

(e) the prospectus of a Top Fund discloses, or will disclose, in the next renewal or amendment thereto following the date of the decision granting the Exemption Sought, the fact that the Top Fund may invest in the Underlying Investment in excess of the Control Restriction on the basis provided for herein;

(f) a Top Fund will not invest in the Underlying Investment unless the net asset value of the Underlying Investment is based on a valuation of the portfolio assets of the Underlying Investment that is independently appraised by an arm's length third party to the Underlying Investment Manager on at least an annual basis; and

(g) A Top Fund will not invest in the Underlying Investment for the purpose of exercising control over, or management of, the Underlying Investment.

"Darren McKall"
Associate Vice President, Investment Management Division
Ontario Securities Commission

Application File #: 2025/0285
SEDAR+ File #: 6277424