Additional Considerations
Investment funds and their managers are not constrained by restrictions on the payment of placement fees to placement agents or communications with prospective investors that are governmental entities or public pension plans.
PAY TO PLAY OBLIGATIONS Canada has not developed “pay to play” rules similar to those of some states and municipalities in the United States. Accordingly, investment funds and their managers are not constrained by restrictions on the payment of placement fees to placement agents or communications with prospective investors that are governmental entities or public pension plans. AML MONTHLY REPORTING OBLIGATIONS Once a dealer or adviser becomes a registrant or relies on one of the exemptions from registration, it is required to file a Monthly Suppression of Terrorism and UN Sanctions Report confirming that it has had no dealings with certain “designated persons.” This report is made only in respect of the registrant’s (or the exempt entity’s) dealings with its Canadian clients. In order to comply with the monthly reporting requirement referred to above, registrants and exempt entities should obtain appropriate representations from each of their clients that it is not a designated person, and that the client will advise the registrant or exempt entity if at any time that ceases to be the case. EXTRAPROVINCIAL LICENCES Private funds that market their interests to investors in Canada may also need to register extraprovincially in the provinces or territories where they are active. For example, a limited partnership that issues securities to a person in Ontario is required to register extraprovincially in Ontario. In addition, persons that “carry on business” in a particular province or territory may be required to register. Each province and territory has its own regime for such registrations and a different test as to when an extraprovincial registration or licence is required. PRESCRIBED FEES Each province and territory has its own prescribed fees that a fund or registrant must pay to register, maintain registration, issue securities and file other various forms and applications, as described above. An annual participation fee is payable for registered firms as well as for firms relying on an exemption from registration in Ontario. This fee is based on gross revenue derived from capital market activities in Ontario, subject to a minimum fee.
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Go North, Young Fund!
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