The Securities Commission granted exemptive relief to private investment funds managed by Manulife Investment Management Limited (MIML) and its affiliates, allowing them to invest in related underlying investments that are not reporting issuers. This decision was made under the National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.
The relief was granted from the conflict of interest provisions outlined in section 111 of the Securities Act (Ontario) and section 13.5 of National Instrument 31-103, which typically restrict investments by funds in entities where there is a substantial security holding or significant interest by related parties. Additionally, relief was granted from the related party transaction reporting requirements in section 117 of the Securities Act (Ontario).
The decision was based on several conditions to ensure the integrity of the investment process and protect investors’ interests. These conditions include compatibility of investments with the funds’ objectives, objective pricing, limitations on fees that could duplicate those of underlying investments, and requirements for transparency and disclosure to investors. The funds must also manage liquidity to meet redemption requests and are prohibited from voting securities of underlying investments except under specific circumstances.
The relief is subject to the funds distributing securities solely through exemptions from prospectus requirements, and the investments must be compatible with the funds’ fundamental objectives. The funds must also ensure no duplication of fees, provide investors with disclosure documents, and maintain records of transactions with related persons. Investments must be made at the net asset value determined by an independent third party, and the funds must inform investors annually of their rights to receive disclosure documents and financial statements of underlying investments.
The decision underscores the importance of transparency, investor protection, and the need for funds to act in the best interests of investors while allowing for flexibility in investment strategies.