The Securities Commission has granted an exemption to certain investment funds managed by various filers, allowing them to invest in unregistered fixed income securities known as 144A Securities without these investments being considered illiquid assets under National Instrument 81-102 Investment Funds (NI 81-102). This exemption is contingent on the funds being qualified institutional buyers at the time of purchase and the securities being traded on a mature and liquid market.
The decision is based on the reasoning that 144A Securities, which can be freely traded among qualified institutional buyers without a holding period, provide an attractive investment opportunity and are not inherently illiquid. The exemption aims to enable funds to access a broader range of fixed income investments without breaching the illiquid asset restrictions of NI 81-102, which could otherwise limit their ability to invest in these securities.
The key conditions of the exemption are that the funds must be qualified institutional buyers at the time of purchase, the securities must not be illiquid under part (a) of the definition in NI 81-102, and the market for the securities must be mature and liquid. Additionally, the funds must disclose in their prospectus that they have obtained this exemption.
The relevant legislative provisions underpinning the outcome include sections 1.1, 2.4, and 19.1 of NI 81-102, as well as Rule 144A of the United States Securities Act of 1933, which provides the exemption from registration requirements for resales of certain unregistered securities to qualified institutional buyers.