On October 4, 2018, the Canadian Securities Administrators (CSA) published CSA Notice of Amendments, Modernization of Investment Fund Product Regulation – Alternative Mutual Funds (the Amendments). The Amendments establish a comprehensive framework for alternative mutual funds and streamline the regulation of non-redeemable investment funds.
The Amendments are subject to approval and possible changes but are expected to enter into force January 3, 2019.
Briefly, the Amendments:
- rename “commodity pools” as “alternative mutual funds” and modernize the regulatory regime governing these products by moving most of the regulatory framework in National Instrument 81-104 Commodity Pools into National Instrument 81-102 Investment Funds;
- update the investment restrictions for alternative mutual funds, allowing greater flexibility with investing strategies and focusing on those typically associated with “liquid alternatives.” The updates include increased concentration limits, more flexibility for fund-of-fund investing, an increased ability to borrow cash for investing purposes, and increased flexibility to short-sell and around the use of derivatives, amongst others;
- simplify the prospectus requirements for alternative mutual funds by fully bringing them within the prospectus disclosure regime applicable to other mutual funds. Similar investment restrictions are also being introduced for non-redeemable investment funds; and,
- include changes that will codify certain routine exemptive relief granted to mutual funds.
The Amendments are available for download from the websites of the participating jurisdictions.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.