The Securities Commission has granted an exemption to CI Investments Inc. (CI) and its affiliates, allowing their managed investment funds to invest up to 10% of their net assets in SICAV Funds governed by Luxembourg laws and UCITS Funds overseen by the Central Bank of Ireland. These foreign funds are not subject to Canadian National Instrument 81-102 (NI 81-102) and are not reporting issuers in Canada, which would typically restrict Canadian funds from investing in them. However, the exemption was approved because the foreign funds adhere to investment restrictions and disclosure requirements similar to those in NI 81-102.
The key conditions for the exemption include:
1. The Underlying Funds must qualify as UCITS and comply with UCITS Regulations.
2. Investments by the Canadian funds in the Underlying Funds must align with section 2.5 of NI 81-102 and include all required disclosures for funds investing in other funds.
3. No Canadian fund may invest more than 10% of its net assets in Underlying Funds.
4. If the regulatory framework for the Underlying Funds materially changes, the Canadian funds must not make additional investments and must divest current holdings.
This decision is based on the belief that such investments offer efficient and cost-effective diversification and access to unique market exposures, align with the funds’ investment objectives, and are in the best interests of the funds. The exemption is contingent on the foreign funds maintaining regulatory practices substantially similar to those required of Canadian funds.