The Securities Commission has granted an exemption to certain investment funds managed by Starlight Investments Capital LP, allowing them to invest in securities of related underlying investment funds that are not reporting issuers and are not subject to National Instrument 81-102 (NI 81-102). This exemption is contingent upon several conditions, including third-party valuation of the underlying funds, approval from an Independent Review Committee (IRC), and compliance with other specified conditions.
Key points of the decision include:
1. The exemption allows the investment funds (referred to as Top Funds) to exceed the usual 10% limit on holding voting or equity securities of an underlying pooled fund.
2. The underlying pooled funds are not subject to NI 81-102 and are not reporting issuers.
3. The Top Funds’ investments in the underlying pooled funds must be valued by a third-party administrator.
4. The Top Funds must comply with the illiquid asset restriction in section 2.4 of NI 81-102.
5. No duplicate fees for sales, redemptions, management, or incentive services are permitted.
6. The Top Funds must disclose their investments in the underlying pooled funds to investors.
7. The IRC must review and approve the Top Funds’ investments in the underlying pooled funds.
8. The Top Funds must maintain records of transactions involving the underlying pooled funds.
The decision is based on the belief that the exemption is in the best interests of the Top Funds and is consistent with the principles of the securities legislation. The exemption is subject to ongoing compliance with the conditions set forth in the decision.