The process for relying on the international adviser exemption is similar to the process for relying on the international dealer exemption described above, and similar fees are payable. A fund manager that claims the international adviser exemption will be subject to monthly AML reporting obligations in Canada, as described below, as well as an annual filing. In Ontario, a registered adviser and each adviser that is relying on the international adviser exemption is required to pay an annual participation fee that is based on gross revenues derived from capital markets in Ontario, subject to a minimum. Navigating the Investment Fund Manager Requirements WHEN IS A FUND AN INVESTMENT FUND? The requirement to register as an investment fund manager (IFM) in Canada depends on three factors. First, is the fund that the manager manages an investment fund for the purposes of Canadian securities laws? Second, is the fund managed from within a province or territory of Canada? Third, in which provinces and territories is an investment fund offering its securities? The definition of “investment fund” is not intuitive. Traditional mutual funds are caught by the definition, as are “non-redeemable investment funds,” defined as an issuer (other than a mutual fund) whose primary purpose is to invest money provided by its securityholders and that does not invest (i) for the purpose of exercising or seeking to exercise control of an issuer, or (ii) for the purpose of being actively involved in the management of any issuer in which it invests, in each case, other than an issuer that is a mutual fund or a non-redeemable investment fund.
Most private equity and venture capital funds, for example, do not fall within the definition of investment fund because they invest either for the purpose of exercising or seeking to exercise control of the issuer or for the purpose of being actively involved in the management of their portfolio companies. In contrast, a hedge fund, which engages in an investment strategy that does not depend on control or involvement in management, would typically be caught by the definition. Registration as an investment fund manager is required only by a person that directs or manages the business, operations or affairs of an investment fund from a physical place of business in that province or territory in a way that establishes a substantial connection to that jurisdiction, or when its head office is in that province or territory. In addition, managers of investment funds that offer securities to investors in the provinces of Ontario, Québec, and Newfoundland and Labrador are deemed to be acting as investment fund managers in the jurisdiction unless they have not actively solicited any investors in that jurisdiction. An exemption similar to the international dealer and international adviser exemptions is available to international investment fund managers that manage private funds in the provinces of Ontario, Québec, and Newfoundland and Labrador. The exemption applies only if the investment funds sponsored by such manager have distributed securities in the local jurisdiction only to permitted clients. The process for relying on the international fund manager exemption is similar to the process for relying on the international dealer exemption and the international adviser exemption described above, and similar fees are payable.
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Marketing Private Funds in Canada
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