Unofficial Consolidation: Companion Policy 81-802CP Implementing NI 81-107 Independent Review Committee for Investment Funds

Unofficial Consolidation: Companion Policy 81-802CP Implementing NI 81-107 Independent Review Committee for Investment Funds

Companion Policy

Ontario Securities Commission

Companion Policy 81-802CP

Unofficial consolidation current to 2006-11-01.

This document is not an official statement of law or policy and should be used for reference purposes only.

Any forms referenced in this document are available separately on the Ontario Securities Commission website.

Companion Policy 81-802CP
Implementing NI 81-107 Independent Review Committee for Investment Funds

Introduction

1.1         The purpose of this Companion Policy is to provide information relating to the manner in which the Ontario Securities Commission (the Commission) interprets or applies certain provisions of Commission Rule 81-802 Implementing National Instrument 81-107 Independent Review Committee for Investment Funds (the Implementing Rule) and National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107).

Interrelationship between NI 81-107 and the Securities Act (Ontario) (the Act)

1.2         NI 81-107 is intended to impose a minimum, consistent standard of governance for all publicly offered investment funds by introducing the requirement for a fully independent advisory body, the independent review committee (the IRC), charged with overseeing all conflict of interest matters faced by the manager in the operation of an investment fund. As a result, NI 81-107 sometimes repeats (without any substantive change) certain requirements that are also dealt with in the Act under Part XXI Insider Trading and Self Dealing.

The cumulative effect of NI 81-107 and the Implementing Rule is that the standard of care and fiduciary duty required under section 2.1 of NI 81-107 is the same standard of care and fiduciary duty imposed under section 116 of the Act for a manager of a mutual fund, and sections 6.1 and 6.2 of NI 81-107 provide for exemptions from some of the prohibitions in Part XXI of the Act, as permitted under sections 121.1 and 121.4 of the Act. A manager of a mutual fund that is a reporting issuer can and should therefore refer to section 2.1 of NI 81-107 in place of section 116 of the Act, and investment funds or mutual funds, respectively, should refer to sections 6.1 and 6.2 of NI 81-107 to see if the exemptions from the prohibitions contained in Part XXI of the Act are met.