The Securities Commission granted an exemption to Priviti Capital Corporation, allowing the transfer of illiquid assets from two of its expiring funds to another fund it manages, despite regulations typically prohibiting such transactions. The exemption was conditional on several factors, including an independent valuation of the assets and approval from an independent review committee.
The exemption was sought from subparagraphs 13.5(2)(b)(ii) and (iii) of National Instrument 31-103, which generally restrict registered advisers from causing investment funds they manage to trade securities with related parties. The decision was made under the securities legislation of Alberta and Ontario, with the Alberta Securities Commission acting as the principal regulator.
The funds involved are not reporting issuers and are structured as limited partnerships focused on investments in the Canadian oil and gas sector. The illiquid assets in question are equity securities of two private companies.
The exemption was granted on the condition that the assets are sold at fair value based on an independent broker’s quote, the transaction is overseen by an independent review committee as per National Instrument 81-107, no remuneration is received by the Filer for the trade, only nominal administrative charges are incurred, and detailed records of the transactions are maintained for five years.
This decision enables the orderly liquidation of assets from the expiring funds, aligns with the investment objectives of the funds, and considers the best interests of the unitholders.