The Securities Commission granted an exemption to investment funds managed by Onex Canada Asset Management Inc. (the Filer) from certain provisions of National Instrument 81-102 Investment Funds (NI 81-102). This exemption allows funds that are qualified institutional buyers to purchase and hold Rule 144A fixed income securities without these securities being considered illiquid assets under NI 81-102, subject to conditions.
Rule 144A under the U.S. Securities Act of 1933 provides an exemption for resales of unregistered securities to qualified institutional buyers, which typically include entities managing at least USD $100 million in securities. While public resales of these securities are subject to holding periods, trades between qualified institutional buyers are not.
The exemption was sought because the Filer believes that certain Rule 144A securities offer attractive investment opportunities and should not be deemed illiquid due to their active trading among institutional investors. The Filer argued that these securities can be as liquid as registered securities and that including them as illiquid assets could prevent funds from accessing beneficial investment opportunities.
The exemption is conditional upon the funds being qualified institutional buyers at the time of purchase, the securities being traded on a mature and liquid market, and the securities not being considered illiquid under part (a) of the definition in NI 81-102. Additionally, the funds must disclose in their prospectus that they have obtained this exemption.
The decision was made considering the Filer’s representations, including the growth and liquidity of the Rule 144A securities market, the ability of qualified institutional buyers to trade these securities freely, and the Filer’s risk management policies and procedures. The Commission concluded that granting the exemption would not be prejudicial to the public interest.