Exemptive relief may be required from the conflict of interest investment restrictions in securities legislation to permit a pooled fund to invest in a related pooled fund. For example, relief is generally required to place a trust on top of a related limited partnership.
Recently, OSC Staff have begun to limit the scope of the future-oriented relief they are willing to grant that would be applicable for any future fund-on-fund structures. The scope of the future-oriented relief that is requested in these applications has, historically, been broader than the specific fund-on-fund structure being contemplated in the application. In the July 2015 issue of Investment Funds Practitioner released by the OSC’s Investment Funds and Structured Products Branch, Staff recognized that they have provided broad future-oriented relief in the past, but that they are now generally limiting such relief to structures substantially similar in features and purpose to the actual “live” structure being contemplated in the application.
The terms and conditions that are set out in the decision document address the conflicts that are inherent in the specific fund-on-fund structure being contemplated, and may not necessarily address the conflicts that would be inherent in a different fund-on-fund structure (such as a future fund-on-fund structure that has not yet been planned and that may involve different entities or different jurisdictions of formation). As a result, if a future fund-on-fund structure deviates from the structure and representations provided in the initial exemptive relief application, Staff will likely refuse to provide such relief, and another application in the future will be required once the specific structure is determined.