iA Clarington Investments Inc. and iA Global Asset Management Inc.
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Fund-on-fund investment requirements of paragraphs 2.5(2)(a), (a.1) and (c) of National Instrument 81-102 Investment Funds, to permit investment funds that are reporting issuers to invest in underlying investment funds that are not reporting issuers -- Relief subject to conditions, including that a Top Fund's aggregate investment in securities of an Underlying Fund will not exceed 10% of the net asset value of the Top Fund and that the independent review committee of a Top Fund review and provide its approval to the purchase of securities of a related underlying investment fund.
Applicable Legislative Provisions
National Instrument 81-102 Investment Funds, ss. 2.5(2)(a), 2.5(2)(a.1), 2.5(2)(c) and 19.1.
June 5, 2025
[Original text in French]
SEDAR+ filing No.: 06249837
IN THE MATTER OF
THE SECURITIES LEGISLATION
OF QUÉBEC AND ONTARIO
(the "Jurisdictions")
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
IA CLARINGTON INVESTMENTS INC.
("iA Clarington")
AND
IA GLOBAL ASSET MANAGEMENT INC.
("iAGAM", and together with iA Clarington, the "Filers")
DECISION
Background
The securities regulatory authority or regulator in each of the Jurisdictions (each a "Decision Maker") has received an application from the Filers on behalf of the Existing Top Funds (as defined herein) and future investment funds managed by iA Clarington which are, or will be, governed by Regulation 81-102 -- Investment Funds ("Regulation 81-102") ("Future Top Funds" and together with the Existing Top Funds, the "Top Funds") for a decision under the securities legislation of the Jurisdictions (the "Legislation") allowing the Top Funds to invest, a portion of their assets in the Blue Owl Credit Income Trust, the PG Partners Fund Access Fund or the Elite UA Funds (as defined herein), as applicable, all of which are investment funds structured as mutual fund trusts that are not subject to Regulation 81-102 and are not reporting issuers in any Canadian Jurisdiction, as defined herein (collectively, the "Initial Underlying Funds") and/or in any other future investment fund that may be managed by iA Clarington, an affiliate or a third party and that is not subject to Regulation 81-102 and which is not a reporting issuer in any Canadian Jurisdiction (the "Future Underlying Funds" and, together with the Initial Underlying Funds, the "Underlying Funds").
The Filers are therefore applying for a decision under section 19.1 of Regulation 81-102 exempting the Top Funds from the following prohibitions:
(a) section 2.5(2)(a) of Regulation 81-102, which prohibits an investment fund from purchasing or holding a security of another investment fund unless, if the investment fund is a mutual fund, other than an alternative mutual fund, either of the following applies: (i) the other investment fund is a mutual fund, other than an alternative mutual fund, that is subject to Regulation 81-102; (ii) the other investment fund is an alternative mutual fund or a non-redeemable investment fund that is subject to Regulation 81-102 and, at the time of the purchase of that security, the investment fund holds no more than 10% of its net asset value ("NAV") in securities of alternative mutual funds and non-redeemable investment funds;
(b) section 2.5(2)(a.1) of Regulation 81-102, which prohibits an investment fund from purchasing or holding a security of another investment fund unless, if the investment fund is an alternative mutual fund or a non-redeemable investment fund, one or both of the following apply: (i) the other investment fund is subject to Regulation 81-102; (ii) the other investment fund complies with the provisions of Regulation 81-102 applicable to an alternative mutual fund or a non-redeemable investment fund; and
(c) section 2.5(2)(c) of Regulation 81-102, which prohibits an investment fund from purchasing or holding a security of another investment fund unless the other investment fund is a reporting issuer in a jurisdiction
(collectively, the "Exemption Sought").
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Autorité des marchés financiers is the principal regulator for this application;
(b) the Filers have provided notice that section 4.7(1) of Regulation 11-102 respecting Passport System, CQLR c. V-1.1, r. 1 (Regulation 11-102) is intended to be relied upon in all the provinces and territories of Canada, including the Jurisdictions (collectively, the "Canadian Jurisdictions" and each, a "Canadian Jurisdiction"); and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Interpretation
Terms defined in the Securities Act (Ontario), Regulation 11-102 and Regulation 14-101 -- Definitions have the same meanings in this decision, unless otherwise defined.
"Elite Pools" refers to the Elite Canadian Equity Income Pool, the Elite Global Equity Income Pool, the Elite Core Canadian Equity Pool, the Elite Core Canadian Fixed Income Pool, the Elite Core Global Equity Pool, the Elite Core Plus Canadian Equity Pool, the Elite Core Plus Global Equity Pool, the Elite Core Plus Global Fixed Income Pool, the Elite Index Plus Canadian Equity Pool, the Elite Index Plus Canadian Fixed Income Pool, and the Elite Index Plus Global Equity Pool collectively.
"Existing Top Funds" refers to the IA Clarington Multi-Strategy Alternative Pool and each of the Elite Pools collectively.
"Elite UA Funds" refers to QV Canadian Small Cap Fund (Elite UA), QV Global Equity Fund (Elite UA), Loomis Global Equity Opportunities Fund (Elite UA) and Loomis U.S. All Cap Growth Fund (Elite UA) collectively.
Representations
This decision is based on the following facts represented by the Filers:
The Filers
1. iA Clarington is a corporation amalgamated under the laws of Canada. iA Clarington's head office is in Québec City, Québec. iAGAM is a corporation organized under the laws of Canada. iAGAM's head office is also in Québec City, Québec.
2. iA Clarington and iAGAM are affiliates of each other.
3. iA Clarington is registered as an investment fund manager in Québec, Ontario and Newfoundland and Labrador and as an exempt market dealer in Québec and Ontario. iAGAM is registered as a portfolio manager in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Quebec and Saskatchewan; as an investment fund manager and derivatives portfolio manager in Quebec; and as a commodity trading counsel and commodity trading manager in Ontario.
4. Neither of the Filers is in default of securities legislation in any of the Canadian Jurisdictions.
The Top Funds
1. The IA Clarington Multi-Strategy Alternative Pool is an alternative mutual fund subject to Regulation 81-102 and organized and governed by the laws of Ontario.
2. The IA Clarington Multi-Strategy Alternative Pool's investment objective is to generate positive total returns over the long-term by investing primarily in a diversified portfolio of alternative mutual funds and/or ETFs. The funds it invests in are expected to utilize alternative strategies and will use leverage. The leverage will be created generally through the use of cash borrowing, short sales and derivatives. The IA Clarington Multi-Strategy Alternative Pool's leverage will not exceed 300% of its net asset value.
3. Each of the Elite Pools is a mutual fund trust subject to Regulation 81-102 and organized and governed by the laws of Ontario.
4. The investment objectives of the Elite Pools are as follows:
(a) Elite Canadian Equity Income Pool -- to provide income and long-term capital appreciation by investing primarily, either directly or indirectly through investments in other mutual funds and exchange-traded funds, in Canadian equity securities that pay, or may be expected to pay, dividends as well as other types of securities that may be expected to distribute income.
(b) Elite Global Equity Income Pool -- to provide income and long-term capital appreciation by primarily investing, either directly or indirectly through investments in other mutual funds and exchange-traded funds, in equity securities of companies located anywhere in the world that pay, or may be expected to pay, dividends as well as other types of securities that may be expected to distribute income.
(c) Elite Core Canadian Equity Pool -- to provide long-term capital appreciation by primarily investing, either directly or indirectly through investments in other mutual funds and exchange-traded funds, in Canadian equity securities.
(d) Elite Core Canadian Fixed Income Pool -- to generate income with the potential for modest long-term capital appreciation by primarily investing, either directly or indirectly through investments in other mutual funds and exchange-traded funds, in a diversified portfolio of Canadian fixed income securities.
(e) Elite Core Global Equity Pool -- to provide long-term capital appreciation by primarily investing, either directly or indirectly through investments in other mutual funds and exchange-traded funds, in equity securities of companies located anywhere in the world.
(f) Elite Core Plus Canadian Equity Pool -- to provide long-term capital appreciation by primarily investing, either directly or indirectly through investments in other mutual funds, in Canadian equity securities. The Fund may also invest in exchange-traded funds to gain exposure to Canadian equity securities.
(g) Elite Core Plus Global Equity Pool -- to provide long-term capital appreciation by primarily investing, either directly or indirectly through investments in other mutual funds, in equity securities of companies located anywhere in the world. The Fund may also invest in exchange-traded funds to gain exposure to equity securities.
(h) Elite Core Plus Global Fixed Income Pool -- to generate income with the potential for modest long-term capital appreciation by primarily investing, either directly or indirectly through investments in other mutual funds and exchange-traded funds, in a diversified portfolio of investment grade and non-investment grade fixed income securities from issuers anywhere in the world.
(i) Elite Index Plus Canadian Equity Pool -- to provide long-term capital appreciation by primarily investing, either directly or indirectly, through investments in other mutual funds and index exchange-traded funds in Canadian equity securities.
(j) Elite Index Plus Canadian Fixed Income Pool -- to generate income and preserve capital over the long-term by primarily investing, either directly or indirectly, through investments in other mutual funds and index exchange-traded funds in a diversified portfolio of Canadian fixed income securities.
(k) Elite Index Plus Global Equity Pool -- to provide long-term capital appreciation by primarily investing, either directly or indirectly, through investments in other mutual funds and index exchange-traded funds in equity securities of companies located anywhere in the world.
5. iA Clarington is the investment fund manager of the Existing Top Funds and iA Clarington, or an affiliate of iA Clarington, will be the investment fund manager of any Future Top Funds. To the extent that iA Clarington or its affiliate is the manager of any Future Top Fund, the representations set out in this decision will apply to the same extent to such Future Top Fund.
6. iAGAM is the portfolio manager of the Existing Top Funds and iAGAM or an affiliate of iAGAM, will be the portfolio manager of any Future Top Funds. To the extent that iAGAM or its affiliate is the 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.
7. The securities of each of the Top Funds are, or will be, qualified for distribution in one or more Canadian Jurisdiction and distributed to investors pursuant to a simplified prospectus and Fund Facts, prepared in accordance with Regulation 81-101 Mutual Fund Prospectus Disclosure.
8. Each Top Fund is, or will be, an investment fund to which Regulation 81-102 applies, and will be organized and governed by the laws of Ontario.
9. Each Top Fund is, or will be, a reporting issuer under the securities legislation of one or more Canadian Jurisdiction.
10. The NAV of the Top Funds is calculated by their fund administrator in accordance with part 14 of Regulation 81-106 -- Investment Fund Continuous Disclosure ("Regulation 81-106"). The fund administrator is independent of each of the Filers and the Top Funds.
11. The Top Funds wish to have the ability to purchase securities of the Underlying Funds.
12. The Existing Top Funds are not in default of the securities legislation of any Canadian Jurisdiction.
13. Each Top Fund is, or will be, subject to Regulation 81-107 -- Independent Review Committee for Investment Funds ("Regulation 81-107") and iA Clarington has established, or will establish, an independent review committee ("IRC") in order to review conflict of interest matters pertaining to its management of the Top Funds as required by NI 81-107.
The Underlying Funds
14. Securities of the Initial Underlying Funds are, and will be, distributed to investors solely pursuant to exemptions from the prospectus requirements in accordance with Regulation 45-106 -- Prospectus Exemptions and/or the securities legislation of the Canadian Jurisdictions.
15. Securities of the Underlying Funds will be distributed to investors solely pursuant to exemptions from the prospectus requirements in accordance with Regulation 45-106 -- Prospectus Exemptions and/or the securities legislation of the Canadian Jurisdictions. Each Underlying Fund produces, or 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.
16. The securities of the Blue Owl Access Fund and PG Access Fund are illiquid assets for purposes of Regulation 81-102, including for purposes of the restriction in section 2.4 of Regulation 81-102 applicable to each of the Top Funds.
17. The securities of the Elite UA Funds are not illiquid assets for purposes of Regulation 81-102.
18. The securities of Future Underlying Funds may or may not be illiquid assets for purposes of Regulation 81-102.
Initial Underlying Funds
Blue Owl Credit Income Trust ("Blue Owl Access Fund")
19. Blue Owl Access Fund is a mutual fund trust originally settled under the laws of the Province of British Columbia and operating under the laws of the Province of Ontario. The investment fund manager and portfolio manager of Blue Owl Access Fund is independent of the Filers.
20. The investment objective of the Blue Owl Access Fund is, through its investment in Blue Owl Credit Income Corp. ("Blue Owl Master Fund"), to generate current income and, to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns, with a focus primarily on originating and making loans to, and making debt and equity investments in, U.S. middle market companies.
21. The Blue Owl Master Fund is a Maryland corporation which has elected to be regulated as a business development company under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act"). The Blue Owl Master Fund is managed by an entity independent of the Filers.
22. Blue Owl Access Fund is an "investment fund" under the securities legislation of the Canadian Jurisdictions as it will invest substantially all of its assets in securities of Blue Owl Master Fund and generally will not invest for the purpose of exercising or seeking to exercise control over Blue Owl Master Fund or any other issuer.
23. Blue Owl Access Fund is not subject to Regulation 81-102 and is not a reporting issuer in any of the Canadian Jurisdictions.
24. The NAV per security of the Blue Owl Access Fund is calculated monthly by its administrator which is independent of each of the Filers, the Top Funds and the Initial Underlying Funds.
25. Blue Owl Access Fund is not in default of securities legislation of any of the Canadian Jurisdictions.
26. The investment objectives of the Blue Owl Master Fund are to generate current income and, to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns. Its investment strategy will focus primarily on originating and making loans to, and making debt and equity investments in, U.S. middle market companies. At least 70% of its assets must be the type of "qualifying" assets listed in Section 55(a) of the Investment Company Act, which are generally privately-offered securities issued by U.S. private or thinly-traded companies and it may also invest up to 30% of its portfolio opportunistically in "nonqualifying" portfolio investments, such as investments in non-U.S. companies or other investment funds. It expects to source investments that have more attractive risk-adjusted return characteristics than solely relying on deal flow from banks and other intermediaries.
27. The Blue Owl Master Fund is not an "investment fund" within the meaning of the securities legislation of the Canadian Jurisdictions as its investment portfolio will include direct investments which may include "control" characteristics including the right to appoint a member or observer to an issuer's board of directors (or similar).
28. No Top Fund will actively participate in the business or operations of Blue Owl Access Fund or Blue Owl Master Fund.
PG Partners Fund Access Fund ("PG Access Fund")
29. PG Access Fund is a mutual fund trust organized and operating under the laws of Ontario. The investment fund manager and portfolio manager of PG Access Fund is independent of the Filers.
30. The investment objective of PG Access Fund is, to invest substantially all of its assets, in participating, non-voting shares of, and conduct its investment program through, PG CAD Access Limited ("Guernsey Feeder"), a corporation incorporated on November 30, 2022 under the laws of Guernsey, which in turn invests substantially all of its assets in units of, and conducts its investment program through, The Partners Fund ("PG Master Fund"), a unit trust constituted by a Trust Instrument, dated December 17, 2002, as amended, and governed by Guernsey law (the "Trust Instrument"). The PG Master Fund is managed by an entity independent of the Filers.
31. The Guernsey Feeder is not an "investment fund" within the meaning of the securities legislation of the Canadian Jurisdictions. The PG Master Fund is not an "investment fund" within the meaning of the securities legislation of the Canadian Jurisdictions as its investments could represent controlling positions in underlying companies.
32. The Guernsey Feeder will invest substantially all of its assets in securities of the PG Master Fund. The investment objective of the PG Master Fund is to achieve capital growth over the medium to long-term by investing in various alternative asset classes and/or alternative investment strategies. The Trust Instrument provides for (a) well defined diversification of the Trust's investments in order to reduce risks associated with alternative investments, and (b) monthly liquidity for investors.
33. PG Access Fund is not subject to Regulation 81-102 and is not a reporting issuer in any of the Canadian Jurisdictions.
34. The NAV per security of the PG Access Fund is calculated monthly by its administrator which is independent of each of the Filers, the Top Funds and the Initial Underlying Funds.
35. PG Access Fund is not in default of securities legislation of any of the Canadian Jurisdictions.
36. PG Access Fund is an "investment fund" under the securities legislation of the Canadian Jurisdictions as it will invest substantially all of its assets in securities of the Guernsey Feeder and generally will not invest for the purpose of exercising or seeking to exercise control over Guernsey Feeder or any other issuer.
37. The PG Access Fund will calculate a NAV for its units once each month as of the last business day of each month. Because the PG Access Fund invests substantially all of its assets in the PG Master Fund indirectly through the Guernsey Feeder, changes in the NAV of the PG Access Fund will be almost entirely based upon the most recently available calendar month-end NAV of the Guernsey Feeder which in turn is based upon the NAV of the PG Master Fund.
38. No Top Fund will actively participate in the business or operations of PG Access Fund, the Guernsey Feeder or the PG Master Fund.
Elite UA Funds
39. Each of the Elite UA Funds is an open-end mutual fund trust governed by the laws of Ontario. iA Clarington acts as trustee and manager and iAGAM acts as portfolio manager of each of the Elite UA Funds.
40. The investment objectives of the Elite UA Funds are:
(a) Loomis Global Equity Opportunities Fund (Elite UA) -- to provide long-term capital appreciation by investing primarily in a diversified portfolio of equity securities of companies located anywhere in the world. It may invest in those securities either directly or by investing in securities of another mutual fund that invests in those securities.
(b) Loomis U.S. All Cap Growth Fund (Elite UA) -- to achieve long-term capital appreciation by investing primarily in equity securities, generally common stock, of companies of any size in the U.S. It may invest in those securities either directly or by investing in securities of another mutual fund that invests in those securities.
(c) QV Canadian Small Cap Fund (Elite UA) -- to maximize long-term capital appreciation by investing primarily in equity securities of small capitalization Canadian companies. It may invest in those securities either directly or by investing in securities of another mutual fund that invests in those securities.
(d) QV Global Equity Fund (Elite UA) -- to provide long-term capital appreciation by investing primarily in a portfolio of equity securities of businesses located anywhere in the world. It may invest in those securities either directly or by investing in securities of another mutual fund that invests in those securities.
41. Each of the Elite UA Funds invests substantially all of its assets in units of another investment fund (each, a "Reference Fund") as follows:
(a) The Loomis Global Equity Opportunities Fund (Elite UA) invests substantially all of its assets in units of IA Clarington Loomis Global Equity Opportunities Fund.
(b) The Loomis U.S. All Cap Growth Fund (Elite UA) invests substantially all of its assets in units of IA Clarington Loomis U.S. All Cap Growth Fund.
(c) The QV Canadian Small Cap Fund (Elite UA) invests substantially all of its assets in units of IA Clarington QV Canadian Small Cap Fund.
(d) The QV Global Equity Fund (Elite UA) invests substantially all of its assets in units of IA Clarington QV Global Equity Fund.
42. Each Reference Fund is a mutual fund trust. iA Clarington acts as investment fund manager and iAGAM acts as portfolio manager of each Reference Fund.
43. Each Elite UA Fund is an "investment fund" under the securities legislation of the Canadian Jurisdictions as it will invest substantially all of its assets in a Reference Fund and will not invest for the purpose of exercising or seeking to exercise control over a Reference Fund or any other issuer.
44. None of the Elite UA Funds is subject to Regulation 81-102 and none of them is a reporting issuer in any of the Canadian Jurisdictions.
45. The NAV per security of each Elite UA Fund is calculated daily by its fund administrator, which is independent of each of the Filers, the Top Funds and the Underlying Funds.
46. None of the Elite UA Funds and Reference Funds is in default of securities legislation of any of the Canadian Jurisdictions.
47. The investment objectives of the Reference Funds are as follows:
(a) IA Clarington Loomis Global Equity Opportunities Fund -- to provide long-term capital appreciation by investing primarily in a diversified portfolio of equity securities of companies located anywhere in the world.
(b) IA Clarington Loomis U.S. All Cap Growth Fund -- to achieve long-term capital appreciation by investing primarily in equity securities, generally common stock, of companies of any size located in the U.S.
(c) IA Clarington QV Canadian Small Cap Fund -- to maximize long-term growth of capital by investing primarily in equity securities of small capitalization Canadian companies.
(d) IA Clarington QV Global Equity Fund -- to provide a combination of income and long-term capital growth through investment in a portfolio consisting primarily of equity securities of businesses located around the world.
48. Each Reference Fund is an "investment fund" within the meaning of the securities legislation of the Canadian Jurisdictions. Each Elite UA Fund is a clone fund of its Reference Fund.
49. No Top Fund will actively participate in the business or operations of an Elite UA Fund or a Reference Fund.
Future Underlying Funds
50. Future Underlying Funds may be structured as limited partnerships, trusts or corporations governed by the laws of any of the Canadian Jurisdictions.
51. The investment fund managers of Future Underlying Funds may be iA Clarington, an affiliate of iA Clarington or a third party. To the extent that iA Clarington or an affiliate of iA Clarington is the investment fund manager of any Future Underlying Funds, the representations set out in this decision will apply to the same extent to such Future Underlying Funds.
52. The portfolio manager of Future Underlying Funds may be iAGAM, an affiliate of iAGAM or a third party. To the extent that iAGAM or an affiliate of iAGAM is the portfolio manager of any Future Underlying Funds, the representations set out in this decision will apply to the same extent to such Future Underlying Funds.
53. Each Future Underlying Fund will be an "investment fund" within the meaning of the applicable securities legislation of the Canadian Jurisdictions.
54. Each Future Underlying Fund will not be subject to Regulation 81-102 and will not be a reporting issuer in any of the Canadian Jurisdictions.
55. The NAV for Future Underlying Funds managed by iA Clarington or an affiliate will be calculated on a daily, monthly or quarterly basis, by the funds' fund administrator, which will be independent of the Filers, the Top Funds and the Underlying Funds.
Investments by Top Funds in the Underlying Funds
56. An investment by a Top Fund in an Underlying Fund will only be made if the investment is compatible with the investment objectives of the Top Fund.
57. iAGAM believes that an investment by a Top Fund in an Underlying Fund will provide the Top Fund with an efficient and cost-effective way for the Top Fund to obtain exposure to diversified alternative and private asset classes, which are generally not available through investment funds that are reporting issuers or through direct investment. The Top Fund will also gain access to the investment expertise of the portfolio manager to the underlying assets of each Underlying Fund, as well as to their investment strategies and asset classes.
58. iAGAM also believes that a meaningful allocation to private equity, private credit, private infrastructure, private real estate and other alternative investments provides Top Fund investors with unique diversification opportunities and represents an appropriate investment tool for the Top Fund that has not been widely available in the past.
59. Investments by a Top Fund in an Underlying Fund will be effected at the NAV per security of the applicable class or series of the Underlying Fund.
60. An investment by a Top Fund in an Underlying Fund 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.
61. Where the securities of an Underlying Fund are considered an illiquid asset for purposes of Regulation 81-102, investments in such Underlying Fund will be included as part of the calculation for the purposes of the illiquid asset restriction in section 2.4 of Regulation 81-102 for the Top Fund. A Top Fund will not invest in an Underlying 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.
62. Where the securities of an Underlying Fund are not considered an illiquid asset for purposes of Regulation 81-102, investments in such Underlying Fund will be limited to 10% of the net asset value of the Top Fund.
63. The prospectus of each Top Fund will disclose in the next renewal or amendment thereto following the date of a decision evidencing the Exemption Sought, the fact that the Top Fund may invest, directly or indirectly, in an Underlying Fund, which are investment funds managed by iA Clarington, an affiliate of iA Clarington or a third party.
64. Where applicable, a Top Fund's investment in an Underlying Fund managed by iA Clarington will be disclosed to investors in that Top Fund's quarterly portfolio holding reports, financial statements, and fund facts documents.
65. Each Top Fund will also comply with the other investment restrictions and practices provided for in Part 2 of Regulation 81-102 in making such investments except where exempted pursuant to the Exemption Sought or other exemptive relief previously obtained.
66. An investment by a Top Fund in an Underlying Fund would not qualify for the exemptions in paragraph 2.5(3) of Regulation 81-102 from the prohibitions set out in paragraphs 2(a), 2(a.1) and 2(c) because securities of the Underlying Funds are not index participation units issued by an investment fund and are not issued by another investment fund established with the approval of the government of a foreign jurisdiction and the only means by which the foreign jurisdiction permits investment in the securities of issuers of that foreign jurisdiction is through that type of investment fund.
67. In respect of an investment by a Top Fund in an Underlying Fund, (i) no sales or redemption fees will be paid as part of the investment in the Underlying Fund; and (ii) 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 Fund for the same service.
68. The Filers consider that investments by the Top Funds in Underlying Funds managed by iA Clarington or an affiliate raise "conflict of interest matters" within the meaning of NI 81-107 and therefore if the Exemption Sought is granted, iA Clarington will request approvals of the IRC for the proposed investments of the Top Funds in the Underlying Funds managed by iA Clarington or an affiliate, including by way of standing instructions. No such investments will be made until the IRC provides its approvals under section 5.2 of NI 81-107.
Decision
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:
(a) iA Clarington or an affiliate is the registered investment fund manager of each Top Fund and iAGAM or an affiliate is the registered portfolio manager of each Top Fund;
(b) no Top Fund will actively participate in the business or operations of any Underlying Fund;
(c) where the Underlying Fund is managed by iA Clarington or an affiliate, each Top Fund will be treated similar to an arm's-length investor when making investments in such Underlying Fund, with such investment being accepted by the Underlying Fund on a fair and equitable basis as compared to all other third-party investors;
(d) the investment by a Top Fund in securities of an Underlying Fund is compatible with the investment objectives and strategies of the Top Fund;
(e) where the securities of an Underlying Fund are considered an illiquid asset for purposes of Regulation 81-102, investments in such Underlying Fund are included as part of the calculation for the purposes of the illiquid asset restriction in section 2.4 of Regulation 81-102 for the Top Fund;
(f) where the securities of an Underlying Fund are not considered an illiquid asset for purposes of Regulation 81-102, investments in such Underlying Fund will be limited to 10% of the net asset value of the Top Fund.
(g) in respect of an investment by a Top Fund in an Underlying Fund, 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 Fund for the same service.
(h) where a Top Fund invests in an Underlying Fund managed iA Clarington, an affiliate or an associate, no sales fees or redemption fees will be payable by the Top Fund in relation to its purchases or redemptions of the securities of the Underlying Fund.
(i) in respect of an investment by a Top Fund in an Underlying Fund, no sales or redemption fees will be paid as part of the investment in the Underlying Fund;
(j) where applicable, a Top Fund's investment in an Underlying Fund, will be disclosed to investors in such Top Fund's quarterly portfolio holding reports, financial statements and fund facts;
(k) the prospectus of each 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 Top Fund may invest in securities of the Underlying Funds which are investment funds managed by iA Clarington, an affiliate of iA Clarington or a third party;
(l) where a Top Fund invests in an Underlying Fund managed by iA Clarington, an affiliate or an associate, the investment will be made in compliance with all applicable securities legislation of the Canadian Jurisdictions, including all of the restrictions set out in Part 2 of Regulation 81-102, except where exempted pursuant to the Exemption Sought or other exemptive relief previously obtained;
(m) the IRC of a Top Fund will review and provide its approval, including by way of standing instructions, prior to the purchase by a Top Fund of an Underlying Fund managed by iA Clarington, an affiliate or an associate in accordance with section 5.2(2) of NI 81-107. iA Clarington will comply with section 5.1 of NI 81-107 and iA Clarington and the IRC of the Top Fund will comply with section 5.4 of NI 81-107 for any standing instructions the IRC provides in connection with the transactions;
(n) where a Top Fund invests in an Underlying Fund managed by iA Clarington, an affiliate or an associate, iA Clarington will not cause the securities of an Underlying Fund held by a Top Fund to be voted at any meeting of the holders of such securities, except that iA Clarington may arrange for the securities the Top Fund holds of an Underlying Fund to be voted by the beneficial owners of the securities of the Top Fund.
(o) a Top Fund will invest in, and redeem, each Underlying Fund at the NAV of the applicable securities of the Underlying Fund, which will be based on the valuation of the applicable portfolio assets to which the Underlying Fund has exposure, determined by a third party that is independent of the Filers, the Top Funds and the Underlying Funds; and
(p) a Top Fund will invest in a Future Underlying Fund only where the Underlying Fund is structured in similar ways to the Initial Underlying Funds and the NAV of the Future Underlying Fund is based on a valuation that is determined by a third party that is independent of the Filers, the Top Funds and the Underlying Funds.
"Frédéric Belleau"
Senior Director, Investment Products and Sustainable Finance