We are pleased to introduce this new segment to our monthly bulletin, where we will share questions frequently asked to our lawyers.
- Why is it acceptable for an accredited investor certificate in a subscription agreement to deviate from the NI 45-106 definition of accredited investor that includes “except in Ontario” before various categories?
The definition of accredited investor in NI 45-106 includes the words “except in Ontario” before several categories. For example, one prong of the definition states “except in Ontario, a Canadian financial institution, or a Schedule III bank”. This language is due to historic debates between OSC staff and the Ministry of Finance over the appropriate “geography” of certain key prospectus exemptions, with the Ministry of Finance preferring they be in the Act, not in a rule. Subscription agreements often deviate from that form of definition and delete the “except in Ontario” language. This is perfectly permissible and practical in our view as the subscription agreement still achieves the aim of identifying the nature of the investor.
- What is the procedure to be followed in managing unclaimed property?
Unclaimed property legislation generally requires holders of unclaimed property to make reasonable efforts to locate the owners of the unclaimed property so that it can be returned to them. Additional requirements, such as maintenance of a database or record and reporting to government bodies, may apply depending on the type of property (such as cash or securities) and the jurisdiction where the owner/account holder last resided.
What materials are required by regulation to appear on a fund company’s website?
- Fund Facts
- Annual and interim financial statements
- Annual and interim Management Reports of Fund Performance (MRFPs)
- Quarterly Portfolio Disclosure
- Proxy voting record
- News / Media releases disclosing any material changes to the affairs of the Fund
- Independent Review Committee (IRC) Annual Report (which is supposed to be “prominently displayed”)
Many fund managers choose to put other material on the site, and that is actively encouraged by the regulators. For example, fund companies are supposed to make a toll-free telephone number available for people to request a free copy of the prospectus and AIF. But if it is not on the website, then presumably the fund company will not get very many calls to that line.
References to relevant legislation:
- NI 81-101: section 2.3.1(1-3) (FF), CP 81-101 sections 2.8, 4.1.3(3), 3.4(3) (toll-free telephone #).
- NI 81-106: section 5.1(2)(a-d) (statements, reports), 5.5, 6.2(2) (quarterly report), 10.4(1-2) (proxy voting record), 4.5
- NI 81-107: section 2(b)