The Securities Commission has granted exemptive relief to investment fund managers (the Filers) from certain provisions of the Securities Act (Ontario) that restrict investments in issuers where a substantial securityholder has a significant interest. This decision allows investment funds managed by the Filers to invest up to 10% of their net assets in a closed-end pooled fund (SCP II) managed by Sagard, a subsidiary of Power Corporation of Canada, which is a substantial securityholder of the Filers.
The relief is contingent on the investments being consistent with the funds’ objectives, approval by each fund’s independent review committee (IRC), and compliance with relevant investment restrictions on illiquid assets as per National Instrument 81-102 (NI 81-102). Additionally, the Filers are exempt from management company reporting requirements, provided they disclose the particulars of any investments made under the relief in their annual filings.
The decision is underpinned by the Securities Act (Ontario), specifically sections 111(2)(c)(ii), 111(4), 113, and 117, and is subject to conditions that ensure the investments are in the best interests of the funds and their investors. The Filers must also adhere to the requirements of National Instrument 81-107 (NI 81-107) regarding IRC approval and oversight.
The outcome enables the Filers to offer their investors the potential benefits of private credit investments, which may improve fund performance and reduce risk and volatility. The decision was made considering the cost and time savings for the Filers and the alignment with the funds’ investment objectives.