aima canada handbook - integrated asset management

AIMA CANADA Handbook

Including an Introduction to the Canadian Hedge Fund Industry,

Securities Regulation, the Investor Environment and Member Directory

http://aima-canada.org/

Disclaimer

To our aima canaDa HanDbook sponsors:

Thank you to the many individuals that made this publication possible. To our committee members: Paul Patterson, Chris Pitts, James Burron, Gary Ostoich and Michael Burns.

To our article contributors: Gary Ostoich, Eamonn McConnell, James Burron, Paul Patterson, Les Marton, Alfredo D’Onofrio, Chris Pitts, Darin Renton, Michael Burns, Manjit Singh, Vinod

Ramnarine, Jennifer Wainwright, Ron Kosonic, Peter Hayes, James Loewen, Claude Robillard, Cathy Singer, Barry Segal, Michael Bunn and Katrina Rempel.

To our sponsors: Horizons ETFs, Norton Rose Canada LLP, Investment Administration Solution, SW8 Asset Management Inc., CommonWealth Fund Services, Ernst & Young LLP,

PricewaterhouseCoopers LLC, JC Clark Ltd., Niagara Capital Partners, HR Stratégies Inc., Montréal Exchange, Davies Ward Phillips & Vineberg LLP, CIBC Prime Services Group, The Investment

Partners Fund and BMO Capital Markets.

To our designer: Heather Martinez–for making the Handbook look as good as it does.

To our AIMA Canada interns from University of Waterloo who worked on the idea generation, logistics and many emails required to get it to press: Jovine Chan and Fernando Kou.

Material contained in this publication is a summary only, and is based on information believed to be reliable from sources within the market. The opinions contained in this publication are and must be construed solely as statements of opinion, and not statements of fact or

recommendations to purchase, sell or hold any securities. It is not the intention of the Canada National Group of the Alternative Investment Management Association (“AIMA Canada”), that

this publication be used as the primary source of readers’ information, but as an adjunct to their own resources and training.

No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication. AIMA

Canada will not be liable to the reader in contract or tort (including for negligence), or otherwise for any loss or damage arising as a result of the reader relying on any such information or

recommendation (except in so far as any statutory liability cannot be excluded).

This publication has been prepared for general information without regard to any particular person’s investment objective, financial situation or needs. Accordingly, no recommendation

(express or implied) or other information should be acted on without obtaining specific advice from an authorised representative. Any figures are purely estimates and may vary with changing

circumstances. Also, past performance is not indicative of future performance.

Table of contents

5 introduction

6 Overview of Canada’s Hedge Fund Industry

8 About AIMA Canada

9 CAIA: Education in Alternatives

11 about canada

13 Canadian Financial Centres: Toronto, Montréal, Vancouver, Calgary

20 Canadian Banks: Prime Examples of Stability

24 Fund Administration for the Global Hedge Fund Industry

26 regulation, compliance & structuring

28 Securities Registration and Compliance

32 Marketing & Sale of Foreign Domiciled Investment Funds in Canada

38 Tax Considerations for Foreign Funds

42 Commodities Futures and Derivatives

46 Structuring a Canadian Hedge Fund

53 raising capital

54 The Rise of Alternative Investments in Canada: The Case for Emerging Managers

58 Foreign Investors in Canadian Hedge Funds

62 The Canadian Asset Raising Landscape

66 Thank You to our aima canada Handbook sponsors

83 member Directory: Hedge Fund and FoHF managers

97 member Directory: service providers

introduction

6 |

OVERVIEW OF CANADA’S HEDGE FUND INDUSTRY

The establishment of the Canada National Group of AIMA in 2003 was an important event for the industry in terms of bringing Canadian alternative investment managers, service providers and investors together to represent the industry with a common voice. AIMA Canada’s mandate includes policy development, promoting sound practices, investor education and liaising with regulatory bodies.

What happened in Canada in 2008, was for the most part, a microcosm of what happened globally – a number of funds in the Canadian market were hit hard and especially highly levered funds or those focused exclusively on long-biased equity strategies.

However, there were a number of strategies and managers that did very well and provided outstanding benefits to their investors in the most challenging of times. Although some managers closed down, the industry has emerged stronger than ever.

Today, Canadian hedge fund managers continue to perform very well compared to equity markets and the majority of funds have exceeded pre-2008 high-water marks.

KCS Fund Management and Simon Fraser University in British Columbia published a paper in 2009 entitled “Risk and Return in the Canadian Hedge Fund Industry” (an AIMA Canada-Hillsdale Research Award

INTRODUCTION

Gary OstoichChair, AIMA CanadaPresident, Spartan Fund Management

The Canadian hedge fund industry has come a long way from its inception in the late 80s/early 90s. AUM continues to grow rapidly, reflecting the quality of managers, which has never been higher, the confidence of institutional investors, and the respect that the Canadian financial industry has earned in the international arena.

http://aima-canada.org/docs.pl?rm=send_file&record_id=391

http://aima-canada.org/docs.pl?rm=send_file&record_id=391

2012 AIMA CANADA HANDBOOK | 7

winner) about the benefits of investing with Canadian hedge fund managers. The paper examined a broad range of strategies and compared Canadian performance with hedge funds located in other jurisdictions – concluding that Canadian hedge fund managers provide very attractive opportunities to Canadian and non-Canadian investors.

From a regulatory perspective, Canada has had a comprehensive framework for money managers, including hedge funds, for decades. Some refinements and additional registration requirements have been implemented; however, while the additional regulatory burden continues to be a challenge for new managers, it has not hampered growth in our business. On the positive side, there is a better understanding by Canadian regulators about hedge funds and their beneficial role within capital markets, which is a good thing for the industry.

In recent years, there has been significant progress in terms of the institutionalization of Canadian hedge fund managers. Better businesses are being built – focusing on operations, governance, risk management, separation of duties and transparency. As a result, a number of Canadian managers are ranked on a global basis as top quality managers – from both an infrastructure point of view and a return/risk point of view.

Another positive sign for the industry is increasing allocations from institutional investors inside and outside Canada who are attracted to the performance and institutionalization of Canadian fund managers and who wish to access Canadian funds, whether through Canadian based fund of funds or accessing Canadian managers directly.

There is no doubt that the shape of the Canadian industry has changed over the years, and will continue to change. High-caliber managers continue to enter the industry – typically from large financial institutions – creating additional choice and opportunity for Canadian and international investors. As well, we have seen the number of strategies being traded within Canada expand and some Canadian-based managers focused on international markets. This has resulted in a dramatic shift and growth in the AUM of the industry, which is estimated, to have grown from $12 billion five years ago to over $30 billion today. It is interesting to note a record number of Canadian based hedge funds have “hard closed” over the past 12 months.

All of these factors bode very well for the future of the Canadian hedge fund industry.

8 |

ABOUT AIMA CANADA

AIMA was established in 1990 as a direct result of the growing importance of alternative investments in global investment management. AIMA is a not-for-profit international educational and research body that represents practitioners in hedge fund, futures fund and currency fund management – whether managing money or providing a service such as prime brokerage, administration, legal or accounting. AIMA’s global membership comprises over 1,300 corporate members, in over 40 countries and AIMA Canada now has over 80 corporate members including approximately 48 hedge fund and FoHF managers.

The objectives of AIMA and AIMA Canada are to provide an interactive and professional forum for our membership and act as a catalyst for the industry’s future development; to provide leadership to the industry and be its

pre-eminent voice; to develop sound practices, enhance industry transparency and education; and to liaise with the wider financial community, institutional investors, the media, regulators, governments and other policy makers.

In addition to working with regulators, holding luncheons and information sessions, AIMA Canada has developed several publications focused on Canadian hedge funds. My fellow AIMA Canada executives include:

• Chairman – Gary Ostoich, President of Spartan Fund Management

• Secretary – Andrew Doman, COO of Man Investments Canada Corp.

• Treasurer – Christopher Pitts, Partner at PricewaterhouseCoopers LLP

• Legal Counsel – Michael Burns, Partner at McMillan LLP

• COO – James Burron, AIMA Canada

Eamonn McConnellDeputy Chair, AIMA Canada Portfolio Manager, Kensington Capital Partners

AIMA Canada, a National Group of the Alternative Investment Management Association (AIMA), was formed in March 2003 to act as the voice of the alternative investment industry in Canada.

INTRODUCTION

http://aima-canada.org/

http://www.aima.org/



CAIA: EDUCATION IN ALTERNATIVES

James Burron, CAIAChief Operating OfficerAIMA Canada

The progeny of AIMA and the Center for International Securities and Derivatives Management (CISDM) - represented by Florence Lombard and Thomas Schneeweis, respectively - the Chartered Alternative Investment Analyst (CAIA) designation has become the global mark of alternative investment accreditation.

Since the program was officially launched in 2002, over 5,400 people worldwide have attained the CAIA designation (including over 300 in Canada). CAIA Charterholders hold membership in the CAIA Association, which is run out of its world headquarters in Amherst, Massachusetts with over a dozen chapters worldwide, including three active Canadian sub-chapters in Toronto, Montréal and Vancouver.

The curriculumThe curriculum, tested bi-annually with a 2-level exam format, includes hedge funds/funds of hedge funds and related strategies, commodities, derivatives (including options, futures and various credit-linked instruments) topics as well as private equity, public and private real estate investment (direct and indirect) and even newer (so-called “alt-alt”)

topics such as cat(astrophe) bonds and weather derivatives. It is assumed that candidates have a fairly broad and deep knowledge of traditional investments and a pre-test is recommended to ensure the recommended base of understanding is present.

CAIA candidates gain in-depth knowledge on virtually every alternative investment area of study from both academics and practitioners who lead their respective spheres in experience and ability to make the subjects clear and relevant.

benefit of membershipAs a founding association, all employees of members of AIMA (including those of AIMA Canada) are eligible to receive a 25% discount on first-time exam fees. (A savings of over USD 625 per employee.)


http://www.isenberg.umass.edu/cisdm/

http://www.isenberg.umass.edu/cisdm/

http://caia.org/

about canada

12 | ABOUT CANADA


TORONTO: CANADA’S BUSINESS AND FINANCIAL CAPITAL

Situated only a short travel distance from the aforementioned cities – gate-to-gate flight time is approximately 90 minutes from New York, an hour from Chicago – Toronto makes an ideal adjunct stop for international investors making their regular North America due diligence rounds.

Toronto is home to well over 80 hedge fund managers and has spawned a growing and exceptionally dynamic hedge fund and alternative investment “ecosystem” with new players constantly entering the market as spinoffs from local trading desks, traditional investment managers and other hedge funds.

With an impressive international reputation for safety, soundness and stability, Toronto is also recognized as a leading global financial services centre. It is home to the Toronto Stock Exchange (the “TSX”) – the third largest exchange in North America and the seventh largest in the world by market capitalization – as well the vast majority of Canada’s largest banks and financial services firms, including at last count, ten domestic

banks, eighteen foreign bank subsidiaries, twenty-one branches of foreign banks, over a hundred and twenty securities firms and sixty life insurers.

Toronto’s vast financial services sector makes one of the largest contributions to the local economy and sustains many other related industries as a leading consumer of resources, including law, accounting, information technology, education/training, and business services. It also hosts a growing list of financial services technology providers: seven of the top ten hedge fund administrators have significant offices located in Toronto.

International investment managers planning a visit would do well to know that Toronto has over thirty >$1 billion dollar pension plans – three of Toronto’s public pension plans rank among the top sixty in the world – that manage an aggregate of close to US$500 billion. Canadian pension plans are well-known for embracing alternative investments, including hedge funds (both managed domestically and by foreign managers).

With a population of close to 2.5 million, Toronto is the business and financial capital of Canada and represents the third-largest North American financial services centre after New York and Chicago. The bulk of Canadian hedge fund managers are situated here.

http://www.toronto.ca/

14 | ABOUT CANADA


MONTRéAL: CANADA’S INTERNATIONAL FINANCIAL CENTRE

Although just a short distance – less than an hour’s flight time – from New York and Boston (or one hour flight from Toronto), what makes Montréal unique is its bilingualism (French and English) making it an ideal gateway between the economies of Europe and America. While French is the official language of Québec (the Canadian province where Montréal is situated), it has the ability to operate seamlessly in English and other languages: fifty percent of Montréal residents are bilingual while another 18% are trilingual.

This diversity has made Montréal an attractive place for international business. As witness, Montréal is home to more than sixty international organizations, more than 1,250 foreign subsidiaries and corporations and has the highest number of consulates in North America outside of New York.

In addition, over one hundred Montréal-based financial firms have been awarded the International Financial Centre (“IFC”) accreditation by the International Financial Centre of

Montréal – a local body formed by Québec provincial government in collaboration with the Montréal Exchange and the City of Montréal to promote Montréal as an international financial centre – which allows them to qualify for tax benefits on their international transactions.

Several of Canada’s chartered banks have their head offices in Montréal, as well as the management of some of Canada’s largest public pension plans such as the Caisse de dépôt et placement du Québec (the Caisse), the Public Sector Pension Investment Board and several large corporate plans.

Indeed, the Caisse ranks among the largest portfolio managers in North America and is widely considered one of the leading public fund managers in Canada. It has furthermore been on the forefront internationally in the acceptance of alternative investments and, anchored by the Caisse’s tutelage and influence, Montréal has developed its own hedge fund and alternative investment expertise.

Montréal is Canada’s second largest city with a population of over 1.6 million and North America’s 7th largest, and has a long history of leadership in financial services and pension plan management as well as being home to the Montréal Exchange, the centre of derivatives trading in Canada. Five distinguished finance universities and over 2,000 CFA charterholders reside in and around the city.

http://www.ville.montreal.qc.ca

16 | ABOUT CANADA


VANCOUVER: CANADA’S GATEWAY TO THE PACIFIC

Financial services employ more than 55,000 people in the greater Vancouver area (which consists of over 1.2 million people). And while Vancouver’s financial services industry initially started to support the mining and forestry industries – for many years the key drivers of the city phenomenal growth – now local financial services companies operate in global markets, leveraging and facilitating Vancouver’s position as a global commercial gateway.

Shared language and customs and proximity with the United States – Vancouver is only one hour from Seattle, two hours from San Francisco and three hours from Los Angeles by air – are critical assets, as are strong cultural connections to emerging Asian economies. Regarding the latter, Vancouver has in recent years successfully established itself as a prominent international centre for businesspeople and investors from the Asia-Pacific region looking to establish a North American beachhead, and is

home to one of the world’s largest and vibrant Asian immigrant/expatriate communities.

All five of Canada’s largest banks have significant operations in Vancouver as well as several international banks, including the Canadian headquarters of London’s HSBC – one of the world’s largest banks.

In addition, the International Financial Activity Act (IFAA) promulgated by the province of British Columbia (or BC, the Canadian province where Vancouver is situated) allows corporations carrying out specified international financial activities in British Columbia, where one part of the transaction is with a non-resident, to recoup up to 100% of provincial corporate income taxes. Thus, Vancouver is developing an important niche in international treasury and financial functions, including factoring, import/export financing, foreign exchange, and back-office support.

Vancouver repeatedly ranks as one of the world’s most livable cities. Featuring a dynamic internationally-focussed business community – many with strong ties to the rapidly-growing Asia-Pacific region – not to mention modern urban amenities situated just minutes away from world-class ski resorts, pristine beaches and spectacular old-growth forests.

http://vancouver.ca/

18 | ABOUT CANADA


CALGARY: WESTERN CANADA’S FINANCIAL CENTRE

Although the energy sector drives Calgary – the province of Alberta produces about 70% of Canada’s crude oil and 80% of its natural gas – the rapid growth of this sector has fuelled a whole host of ancillary industries catering not to just the financing required by the energy industry but also to managing and diversifying the great wealth created by it and its participants. Indeed, since the early 1990s, Calgary’s financial services sector has become a major contributor to the strong economic growth in Alberta, which is considered among the fastest growing economies in North America.

Calgary’s financial services sector includes all six of Canada’s major chartered banks, strong regional banks, international investment banks and numerous financial investment firms. This concentration of business and financial talent has spawned several strong Calgary-based hedge

funds, many of which have leveraged their homegrown expertise in the energy markets.

Given its strong entrepreneurial culture, Calgary is also the headquarters for the TSX Venture Exchange, an exclusively micro-cap and small-cap stock exchange (affiliated with Toronto’s TMX Group) that provides much-needed access to capital for early-stage companies in all industry sectors across Canada.

Calgary – a city of over 1 million people situated in the southern part of the province of Alberta – is Western Canada’s business centre and has more head offices per capita than any other Canadian city. While Toronto has traditionally been viewed as Canada’s financial centre, the growth in Calgary – largely but not exclusively due to its strength in the energy sector – means that the city has been gaining a reputation as a global financial centre.

http://www.calgary.ca

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CANADIAN BANKS: PRIME ExAMPLES OF STABILITY

Why canada’s banks survived the crisis

The Canadian Bankers Association points to four key factors for the success of the system and the Canadian banks’ ability to withstand the shock of the financial crisis.1

1. Banking system diversified with well-managed institutions:

a. The major investment banks are anchored by solid deposit-taking institutions

b. Diversification of regional risk

c. Lending decisions are on a case-by-case basis, extending credit to borrowers that can repay their loans

2. Canada’s strong regulatory system:

a. Canada has two only primary regulators: the Office of the Superintendent of Financial Institutions (OSFI) for regulation and the Financial Consumer Agency of Canada (FCAC) for consumer affairs

3. Strong capitalization of the national banks:

a. As some of the best capitalized in the world, Canadian banks greatly exceed the guidelines set by the Bank for International Settlements

Les MartonHead of Capital Introduction & Hedge Fund Consulting ServicesScotiabank

Alfredo D’OnofrioDirector, Prime Services Scotiabank

crises, what crises? The credit crisis of 2008 and the near collapse of certain financial institutions previously thought “unassailable” has been well-reported, but little has been said of how Canadian banks remained solvent during the many recent global banking crises.

1 March 2009 remarks by Nancy Hughes, President & CEO of the Canadian Bankers Association to the House of Commons Standing Committee on Finance http://www.cba.ca/contents/files/presentations/pre_20090309_01_en.pdf

ABOUT CANADA

http://www.cba.ca/contents/files/presentations/pre_20090309_01_en.pdf

http://www.cba.ca/contents/files/presentations/pre_20090309_01_en.pdf


b. Strategically raising equity in the marketplace when appropriate

4. Prudent mortgage lending:

a. The vast majority of mortgages are prime and only 20% are securitised

b. Mortgages with less than 20% down must be insured

c. Mortgage arrears are very low (0.33% for the seven largest Canadian banks)

impact of the Global Financial crisis and Hedge Funds’ response

Canadian banks have capabilities that dovetail nicely with some of the post-2008 needs of hedge fund managers.

Hedge funds by virtue of their strategies are poised to capitalize on the ensuing market opportunities. However these same developments have caused prudent fund managers to refine their approach to counterparty risk.

Six key trends have emerged to help shape industry thinking:

1. Vastly different macro environments, both from an economic and regulatory perspective, have increased the importance of diversifying financing relationships jurisdictionally.

2. Investors are demanding more transparency of a hedge fund’s infrastructure, counterparty relationships, portfolio structures and risk management.

3. Hedge funds require a greater legal understanding of asset segregation and re- hypothecation rules, and how they apply to their accounts.

4. The multiple-prime broker scenario has increasingly become the standard structure for all hedge funds with a critical asset base.

5. Hedge funds need advanced operations platforms to manage these multiple counterparty relationships.

6. Many large hedge funds have entered into multi-prime relationships in order to manage counterparty risk.

multiple-primes and the case for Jurisdictional DiversificationThe multiple-prime broker arrangement offers a number of important benefits to hedge funds:

• Counterparty risk diversification

• Access to a larger pool of securities lending and hard to borrow securities

• Research across firms and access to more companies

• Multiple capital introduction sources

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StableAA-AA-Toronto-Dominion Bank 3

StableAA-AA-Bank of Nova Scotia1

Rank Name Today Dec, ‘07 Credit Watch

2 Royal Bank of Canada AA- AA- Stable

4 BNP Paribas AA- AA+ Negative

5 Bank of Montreal A+ A+ Stable

6 CIBC A+ A+ Stable

7 Wells Fargo & Co. A+ AA+ Negative

8 Deutsche Bank A+ AA- Negative

9 US Bancorp A AA Stable

10 JPMorgan Chase A+ AA- Negative

11 Barclays Capital A+ AA- Negative

12 Credit Suisse Group A+ A+ Negative

13 Société Générale A AA- Stable

14 UBS A AA Negative

15 Goldman Sachs A- AA- Negative

16 Bank of America A- AA Negative

17 Citigroup A- AA Negative

18 Morgan Stanley A- AA- Negative

StableAA-AA-Toronto-Dominion Bank 3

StableAA-AA-Bank of Nova Scotia1

Rank Name Today Dec, ‘07 Credit Watch

2 Royal Bank of Canada AA- AA- Stable

4 BNP Paribas AA- AA+ Negative

5 Bank of Montreal A+ A+ Stable

6 CIBC A+ A+ Stable

7 Wells Fargo & Co. A+ AA+ Negative

8 Deutsche Bank A+ AA- Negative

9 US Bancorp A AA Stable

10 JPMorgan Chase A+ AA- Negative

11 Barclays Capital A+ AA- Negative

12 Credit Suisse Group A+ A+ Negative

13 Société Générale A AA- Stable

14 UBS A AA Negative

15 Goldman Sachs A- AA- Negative

16 Bank of America A- AA Negative

17 Citigroup A- AA Negative

18 Morgan Stanley A- AA- Negative

s&p credit ratings*

* Long Term Local debt rating as at February 3, 2012

ABOUT CANADA

Of course, simply having multiple prime brokers is not a panacea for all hedge fund counterparty ills. To complement the diversification achieved by having a multiple-prime arrangement, a thorough analysis of each counterparty is required. Having the right counterparties is clearly critical and encompasses other factors such as service and pricing as well as financial viability, capital ratios, quality of capital and leverage. The lessons of 2008 are all-too fresh and the strength of the prime broker and its bank parent need to be carefully considered. Fortunately for Canadian banks, they have emerged out of the detritus of the global financial meltdown with top credit ratings and are extremely well-regarded internationally as the following chart from Standard & Poor’s indicates.


1 Basel III: Now the hard part for European banks http://www.mckinseyquarterly.com/Basel_III_Now_the_hard_part_for_European_banks_2704

The global economic landscape is, in some respects, as fluid as it has been in some time and concerns about counterparty risk are heightened. The implications of the 2011 U.S. downgrade and the ever-looming European debt crisis, combined with pending regulatory changes have been themes that put into question the strength of many of the world’s largest global investment banks.

• While continuing questions around Greek default or restructuring may not necessarily cause European banks to become insolvent (outside of Greece), contagion fears and risk aversion could no doubt lead to further downgrades of some banks.

• Basel III and the Dodd-Frank legislation are expected to exert additional pressure to banks’ business and services. According to a November 2010 McKinsey study, Basel III1 will have a significant impact on the European banking sector as by 2019 the European banking industry will require approximately $1.1 trillion of additional Tier 1 capital, $1.3 trillion of short-term liquidity and $1.3 trillion of short-term funding. The capital need is roughly equivalent to almost 60% of European and U.S. Tier 1 capital outstanding.

• The Dodd-Frank legislation in the U.S. looks to force banks to reduce business activities deemed outside the scope of traditional banking norms. The long-term impact is difficult to assess, however U.S. banks are rethinking business models to accommodate the new regulations, including the winding down/spinning out of proprietary trading desks.

The road ahead

While the global economy had, until quite recently, rebounded from the tumult of late 2008, the path of recovery has shown itself to be uneven and fragile. Between the sovereign debt crisis in Europe, the introduction of new banking rules through Basel III and Dodd-Frank legislation and the continuing concern over rising debt levels, the challenges that face hedge funds have certainly grown in number and complexity. Within the global topography of the banking industry, there are few players that have proven themselves based on their ability to successfully navigate through the financial crisis – Canadian banks are among them.

http://www.mckinseyquarterly.com/Basel_III_Now_the_hard_part_for_European_banks_2704

http://www.mckinseyquarterly.com/Basel_III_Now_the_hard_part_for_European_banks_2704

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FUND ADMINISTRATION FOR THE GLOBAL HEDGE FUND INDUSTRY

History of an industryThe fund administration industry in Canada first experienced substantial growth in the 1990s in lock-step with the growth of the largely U.S.-driven hedge fund industry. At that time, this level of growth, combined with increasing complexity of fund vehicles and investment strategies, as well as certain U.S. tax rules impacting offshore funds, resulted in many offshore centres being constrained from an infrastructure and resource perspective. These factors were critical in driving fund administrators to look to alternative locations for their operations around the world. Toronto thus emerged as a key centre, with a number of global administrators establishing operations to take advantage of some key attributes:

• Time Zone/Location – an advantageous Eastern Time Zone and convenience of being only an hour or so away from New York and Boston;

• Qualified Personnel – Canada has established financial centres with an abundance of qualified professionals and support staff familiar with the capital markets. These human resources also have a similar training and work ethic as found in most U.S. cities, together with cost-effective wages compared to their U.S. counterparts;

• Communications – strong telecommunications infrastructure at comparably cheaper costs to Europe and the Caribbean; and,

Chris PittsPartner, Audit and Assurance GroupPricewaterhouseCoopers LLP

The fund administration industry in Canada is a thriving part of the Canadian financial services economy, with participants across the spectrum from the Canadian boutique administrators to multi-faceted global service providers. In addition, Canadian administrators play a significant role in the global hedge fund industry and Canada’s broad reach in this area has historically not been well-known or fully appreciated.

ABOUT CANADA


• Tax considerations – free trade agreements, particularly with the U.S., as well as Canadian safe harbour tax rules supporting the provision of administration services to offshore funds.

a Thriving industryIn the last decade, the growth of the global fund administration industry in Canada has continued, driven by a variety of factors including a clear and distinct advantage over hurricane-prone offshore centres, the impact of increasing competition in the administration industry that has led organizations to set up key centres of excellence, focused tax incentives by certain levels of government in different parts of the country, and the positive afterglow that Canada has experienced in managing its financial system through the global economic crisis. As a result, while the most significant concentration of operations remains in Toronto, there are centres across the country in Halifax, Montréal and Vancouver, and the number of global administrators operating in the country has grown significantly.

Going ForwardIn this current environment of additional regulation and increased pressure from investors for transparency and robust operational infrastructure, fund administrators continue to expand their service offerings to enable managers to outsource more processes than ever before. Changes in regulatory

and tax regimes are also increasing the complexity of information reporting requirements, from anti-money laundering regulatory requirements to the impact of the Dodd-Frank reforms, the U.S. Foreign Account Tax Compliance Act (FATCA) and Europe’s Alternative Investment Fund Manager Directive (AIFMD). The move to outsourcing has never been more compelling, and the strength of the infrastructure capabilities that are available in Canada never better.

Members of AIMA Canada cover the spectrum from the locally-focused administrator to the global player with operations in numerous countries that service the entire gamut of the hedge fund industry, retail and/or listed vehicles through to privately offered funds.

regulation, compliance &

structuring

28 |

SECURITIES REGISTRATION AND COMPLIANCE

Hedge fund managers in Canada, like other asset managers, may be subject to several types of registration. The registration requirements and ongoing registrant obligations are stringent and comprehensive, demanding that hedge fund managers focus on compliance.

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (“NI 31-103”) establishes registration requirements and exemptions and generally regulates registrants’ activities in all Canadian jurisdictions. Under Canadian securities laws, firms generally must register if

they are in the business of trading, in the business of advising, holding themselves out as being in the business of trading or advising, or acting as an investment fund manager. If a firm engages in more than one of these registerable activities, then (unless it is otherwise exempt) the firm must register in all applicable categories.

1. registration requirementsFor hedge funds operating in Canada, the dealer, adviser and investment fund manager registration categories are relevant:

Darin R. RentonPartnerStikeman Elliott LLP

In Canada, securities regulation is a matter of provincial and territorial jurisdiction. Each of the thirteen jurisdictions has its own securities laws, policies and rules that are administered by a securities regulatory authority or regulator. However, the registration rules have been harmonized, streamlined and modernized, so that compliance with the harmonized national rules will generally result in compliance with the rules in all provinces and territories, with the largest jurisdiction, Ontario, typically acting as lead regulator.

REGULATION, COMPLIANCE & STRUCTURING


(a) Dealer RegistrationPersons who are in the “business of trading” in securities are required to be registered as a dealer in each Canadian jurisdiction where purchasers reside. Hedge fund managers typically address the dealer registration requirement by registering as an exempt market dealer (“EMD”) or retaining a third party dealer to facilitate their offerings. An EMD is permitted to trade in the exempt market (a) in securities being distributed under a prospectus exemption or (b) with persons or companies to whom a security may be distributed under a prospectus exemption (for example, trading with an accredited investor). “Trading” is broadly defined under Canadian securities laws to include not only the sale or disposition of a security for valuable consideration, but also any act, solicitation or conduct which is directly or indirectly in furtherance of the sale or disposition of a security. Accordingly, a hedge fund manager that is not registered as a dealer is not permitted to contact and deal directly with prospective clients. Any such contact would generally be considered an act in furtherance of a trade and would accordingly trigger the dealer registration requirement.

A second dealer category is that of an investment dealer which, unlike

an EMD, may trade in virtually any security with any client (subject to “know your client” criteria and the appropriateness of each trade).

(b) Adviser RegistrationCanadian securities laws require a person or company providing portfolio management services for a Canadian hedge fund to be registered as an adviser in the local jurisdiction where the hedge fund receives the advice (typically, the jurisdiction in which the fund is managed). Adviser registration exemptions are available to international advisers and, in certain jurisdictions, to non-resident sub-advisers.

(c) Investment Fund Manager RegistrationCanadian securities laws require a person that directs the business, operations or affairs of an investment fund to be registered as an investment fund manager (“IFM”) in the province or territory in which its head office is located. A Canadian IFM is also required to register in other provinces or territories if the fund it manages has security holders that are local residents and the IFM or the fund has “actively solicited” local residents to purchase securities of the fund. An exemption from the requirement for Canadian investment fund managers to register in jurisdictions other than the one in which their head office is located has been extended to September 28, 2012.

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2. ongoing compliance requirements

(a) RegistrationNI 31-103 regulates the registration of firms and individuals and consolidates requirements for registration, including proficiency, solvency and insurance requirements, as well as ongoing compliance requirements for registrants. These include requirements with respect to financial reporting, know your client, suitability, client disclosure, safekeeping of assets, recordkeeping, account activity reporting, complaint handling, soft-dollar arrangements, conflicts of interest and other compliance procedures.

(b) FeesFees payable by registrants vary depending on the jurisdiction of registration. In some jurisdictions fees are fixed for the firm and for the individuals registered under the firm, while in others fees are based on the revenues earned by the firm in the jurisdiction. For example, in Ontario registered and exempt firms are required to pay an annual capital market participation fee based on revenues earned in Ontario.

(c) Anti-Money Laundering and Anti-Terrorist Financing LegislationFirms are subject to Canadian anti-money laundering and anti-terrorist financing legislation. Under this legislation, registrants face certain

reporting, filing, record-keeping, client identification and compliance regime requirements, as well as certain other monitoring requirements and restrictions on dealing with designated individuals and groups. Firms must comply with the monthly reporting requirements under federal anti-terrorist financing and UN sanction regulations. Generally, firms are required to complete a monthly prescribed reporting form and submit the form to their principal regulator on the fourteenth day of each month.

(d) Privacy LegislationPrivacy legislation, enacted in Canada at both the federal and provincial levels, applies to the collection, use and disclosure of “personal information” of an individual by an organization in the course of commercial activities. As part of its obligations, a registered firm is accountable for the information it collects, may only collect personal information that is necessary for the purposes identified to the subject individual, and must obtain consent of the individual to collect, store and disclose personal information.

3. other ongoing Filing requirementsHedge funds that distribute their securities pursuant to certain private placement exemptions (including the Minimum Amount and Accredited Investor exemptions as detailed in NI



45-106) must file a report of exempt distribution in the required form, together with the prescribed fees, with the securities regulatory authority in the province or territory in which the trade occurs. A hedge fund manager may elect to file such reports within ten calendar days of each trade (the usual deadline) or, for convenience, not later than 30 days after the financial year-end of the fund. Depending on the jurisdiction, the filing fees are either fixed or equal to a percentage of the gross proceeds realized from the sale of securities in such jurisdiction. Such reports disclose personal information such as the purchaser’s name, address, telephone number and the number and value of any securities purchased.

There are generally no requirements to provide an offering memorandum to investors and limited prescribed disclosure for an offering memorandum (unless the fund is being offered under offering memorandum exemption). If an offering memorandum is delivered in connection with a distribution of securities in reliance on certain private placement exemptions, it will typically need to be filed with the appropriate securities regulator. If the hedge fund is conducting multiple closings, the offering memorandum must be filed on or before the tenth day after the first closing, otherwise it must be filed on or before the tenth day after the

distribution is completed.

Most hedge funds are also required to file annual and semi-annual financial statements with the securities regulatory authorities. However, a hedge fund is exempt from this requirement if the applicable financial statements are prepared and delivered to its securityholders in accordance with applicable securities law and certain other conditions are met.

conclusionAs noted, Canada has a well-developed system of fund manager registration and regulatory oversight over all asset managers—both long-only and hedge fund management companies.

AIMA Canada has an active dialogue with its members and regulatory bodies in order to maintain a soundly regulated and successful asset management industry built on the long-standing foundations of registration, compliance and operational controls.

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MARKETING & SALE OF FOREIGN DOMICILED INVESTMENT FUNDS IN CANADA

registration requirements Any person proposing to engage in the business of a dealer or investment adviser in Canada or who acts as investment fund manager may be required to register (the “Registration Requirement”) with one or more provincial/territorial securities regulatory authorities under the aforementioned National Instrument 31-103. There are only a limited number of exemptions available from the Registration Requirement. Failing to properly register in an appropriate category (or take the necessary steps in order to rely on an exemption from registration) or engaging in activities

beyond the scope of an entity’s registration (or exemption from registration) is a contravention of Canadian securities laws and may result in the assessment of sanctions and penalties.

What Triggers the Requirement to Register? Generally speaking, entities will be required to register if they are: (i) in the business of, or holding themselves out as being in the business of, trading securities (the dealer category); (ii) in the business of, or holding themselves out as being in the business of, advising in respect of the buying and selling of securities (the adviser category); or (iv)

Michael BurnsPartnerMcMillan LLP

This article provides an overview of the securities law requirements in Canada relating to the marketing and sale of foreign domiciled investment funds (“Foreign Funds”) on a private placement basis, with a specific focus on the registration, offering document and filing requirements which the manager of a Foreign Fund will need to consider.



acting as an investment fund manager.

Dealers and Advisers In determining if registration as a dealer or adviser is required, Canadian regulators consider the type of activity and whether it is carried out for a business purpose. This “business purpose” criterion is referred to as the “business trigger” for registration. Canadian securities regulatory authorities may consider a variety of factors in determining whether the business trigger has been met including but not limited to: (i) whether a specified activity is carried out with repetition, regularity or continuity; (ii) whether the activity includes promoting securities or offering advice to solicit securities transactions; (iii) whether a person acts as an intermediary between a seller and buyer of a security; and (iv) whether a person expects to be compensated for the activity.

Investment Fund ManagersInvestment fund managers are not subject to a business trigger test under NI 31-103. This generally means that if a firm carries on the activities of an investment fund manager (i.e., managing the day to day business and affairs of an investment fund), it must register.

categories of registrationAs detailed in the preceding article Securities Regulation and Compliance, the registration categories that would

typically be required to engage in the marketing and sale of Foreign Funds under NI 31-103 are as Investment Dealer, Exempt Market Dealer and Investment Fund Manager.

Canadian securities regulatory authorities do not apply a “look through” test in relation to investment funds as it relates to the adviser registration requirement. The investment advice is considered to be provided to the investment fund itself rather than to “flow through” to the investors in that investment fund. While registration as an adviser is required for Canadian domiciled investment advisers or for the provision of investment advice to investment funds which are established under the laws of a jurisdiction of Canada, a foreign domiciled adviser would generally not be required to register as an adviser in Canada if its activities are restricted solely to providing investment advice to Foreign Funds (even if Canadian residents invest in such Foreign Funds).

Each category of registration under NI 31-103 contains a detailed set of proficiency, minimum capital, insurance, record keeping, financial reporting, conflict of interest, annual fee and other compliance requirements. These requirements must be met in order to obtain and maintain

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registration as a dealer, adviser or investment fund manager. Registration in more than one category and province/territory may be necessary, depending on the scope of activities being conducted in Canada.

exemptions From the Dealer and investment Fund manager registration requirement

International Dealer ExemptionThe international dealer exemption allows non-Canadian dealers who are registered to deal in securities in the jurisdiction where their principal place of business is located to provide restricted services to permitted clients without having to register under NI 31-103. Generally speaking, this exemption restricts the international dealer’s activities to contracting only with permitted clients1 in relation to trades in foreign securities2.

An international dealer must satisfy each of the following conditions in order to rely on the international dealer exemption:

• the head office or principal place of business of the dealer is in a foreign jurisdiction;

• the dealer is registered under the securities legislation of the foreign jurisdiction in which its head office or principal place of business is located in a category of registration that permits it to carry on the activities in that jurisdiction that registration as a dealer would permit it to carry on in the local jurisdiction;

• the dealer engages in the business of a dealer in the foreign jurisdiction in which its head office or principal place of business is located;

• the dealer is acting as principal or as agent for the issuer of the securities, for a permitted client, or for a person or company that is not a resident of Canada;

• the dealer has submitted to the securities regulatory authority a completed Form 31-103F2 Submission to Jurisdiction and Appointment of Agent for Service; and

• the dealer complies with the annual filing/fee requirements as long as it continues to rely on the exemption.


1 Generally speaking, for the purposes of the international dealer exemption the permitted client category includes large institutional investors such as banks, pension funds, trust companies, registered advisers and dealers and very high net worth (over $5,000,000) individuals.

2 For the purposes of the international dealer exemption, foreign securities include securities issued by an issuer formed under the laws of a foreign (non-Canadian) jurisdiction or issued by a foreign government


In addition, in order to rely on the international dealer exemption in respect of a trade with a permitted client the international dealer must provide the client with prescribed disclosure relating to the dealer’s non-resident status, unless the client is a person registered under the applicable Canadian securities legislation.

The international dealer exemption may be of assistance to foreign managers wishing to market Foreign Funds in Canada. However, if the manager is not able to rely on the exemption or if it wishes to market the Foreign Fund to a broader group of potential investors in Canada, it may be necessary to engage either an entity which is able to rely on the international dealer exemption (in respect of trades with permitted clients) or a locally registered dealer to intermediate the investment by Canadian residents in the Foreign Fund.

Temporary exemption for foreign Investment Fund ManagersUnder the current provisions of NI 31-103, the investment fund manager registration requirement does not apply to a person or company that is acting as an investment fund manager if its head office is not in a jurisdiction of Canada. However, this temporary exemption is currently set to expire on September 28,

2012. The exemption is expected to be repealed once multilateral instrument 32-102 – Registration Exemptions for Non-Resident Investment Fund Managers and multilateral policy, 31-202 – Registration Requirement for Investment Fund Managers detailing the circumstances under which a foreign domiciled manager would have to register as an investment fund manager are adopted (following a period of public consultation) by the securities regulatory authorities in the applicable provinces and territories of Canada.

If Multilateral Instrument 32-102, Registration Exemptions for Non-Resident Investment Fund Managers is brought into force in its current form, foreign domiciled investment fund managers may be required to register in the Province of Ontario, Québec, New Brunswick or Newfoundland and Labrador if the manager has engaged in active solicitation of investors in such jurisdiction, subject to certain limited exemptions.

If Multilateral Policy 31-202, Registration Requirement for Investment Fund Managers is brought into force in its current form, foreign domiciled investment fund managers would be required to

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register in the remaining jurisdictions in Canada (British Columbia, Alberta, Saskatchewan, Manitoba, Prince Edward Island or Nova Scotia, Nunavut, the Yukon Territory or the Northwest Territories) if the manager (i) carries on the functions and activities of an investment fund manager in that jurisdiction; or (ii) has its head office or principal place of business in the jurisdiction or conducts the activities of an investment fund manager from a physical place of business in such jurisdiction.

use of offering DocumentsThe distribution of materials to prospective purchasers in Canada describing the business of the Foreign Fund in the context of an offering of securities of the Foreign Fund which are designed to assist the prospective purchaser make an investment decision in relation to the securities of the Foreign Fund may result in such materials being considered as an “offering memorandum” under applicable Canadian securities legislation. Care should be exercised in relation to marketing materials which are provided to potential purchasers in Canada to ensure that they would not be considered to be an offering memorandum under

Canadian securities laws.

Securities legislation in several provinces and territories of Canada provide for statutory rights of action for purchasers to sue for damages or rescission in the event that an offering memorandum is found to contain a misrepresentation.3 A description of these statutory rights is required to be included in any offering memorandum provided to potential purchasers. In addition, there may be Canadian-specific disclosure (e.g., additional Canadian specific risk factors or tax considerations) in relation to an investment in a Foreign Fund which may need to be included in a offering memorandum for a Foreign Fund in order to prevent that document from containing a misrepresentation for Canadian purposes. As a result, it is advisable for managers of Foreign Funds to prepare a Canadian “wrapper” for the offering documents of the Foreign Fund which contains Canadian specific disclosure.

The subscription materials for an investment in a Foreign Fund will also need to be customized (usually through the use of a schedule or addendum to be completed by Canadian purchasers) to ensure that the distribution of the


3 A “misrepresentation” is generally defined as (i) an untrue statement of a material fact, or (ii) an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it is made.


securities of the Foreign Fund may occur in Canada on a basis which is exempt from the requirement for the Foreign Fund to file and clear a prospectus in Canada.

Filing requirementsAs mentioned in the previous article, Securities Regulation and Compliance, the distribution of securities of a Foreign Fund in Canada in reliance on an exemption from the prospectus requirement will necessitate the filing of a prescribed form of report of the exempt distribution with the securities regulatory authority in each province or territory where purchasers of securities are located. In addition, a copy of any offering memorandum (and any amendment thereto) used in connection with the distribution of securities may be required to be filed with the securities regulatory authority in the jurisdictions where purchasers of securities of the Foreign Fund are located.

conclusion Canada features a comprehensive securities regulatory system to maintain integrity in its capital markets. Managers of Foreign Funds should consult with Canadian legal counsel prior to engaging in any marketing activities in relation to Foreign Funds in Canada.

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TAx CONSIDERATIONS FOR FOREIGN FUNDS

Tax considerations often influence how these opportunities are pursued. From this perspective, foreign fund managers should be focused on how to structure Canadian investments to minimize Canadian withholding and income tax on investment returns as well as structuring funds, including feeder funds, in a tax-efficient manner to raise capital from Canadian taxable and non-taxable investors. In addition, an offshore foreign fund that engages Canadian service providers will need to comply with the Canadian safe harbour rules in order to minimize the fund’s Canadian tax exposure.

Foreign Hedge Funds engaging canadian service providersNo matter what opportunity a foreign fund may pursue in Canada, it is prudent for the fund to do so without risking carrying on business in Canada. If a foreign fund was considered to carry on business in Canada, profits from that business (including interest, dividends, fees, and trading gains) would be subject to Canadian income tax. The phrase “carrying on business” in Canada is broadly defined and the concern is that foreign funds risk carrying on business in Canada by virtue of receiving services from Canadian-resident service providers

Manjit SinghAssociateWilson & Partners LLP*

Vinod RamnarineManager, Financial Services Corporate Tax GroupPricewaterhouseCoopers LLP

opportunities & Tax considerations There are extensive opportunities in Canada for foreign hedge funds. Canada offers opportunities not only for investment, but also for raising capital and engaging Canadian service providers in Canada’s vast talent pool that supports the fund industry’s outsourcing needs.

*a law firm affiliated with PricewaterhouseCoopers LLP



(such as investment advisors, managers, dealers) or exerting influence over such Canadian-resident service providers. Fortunately, the Canadian safe harbour rules specifically address this tax risk.

Safe Harbour Rules The Canadian safe harbour tax rules apply to foreign funds structured as corporations or trusts, and to foreign partners of funds structured as partnerships. The safe harbour rules are particularly beneficial for funds resident in countries with which Canada does not have a tax treaty. If all of the necessary requirements are met, the safe harbour rules will deem a foreign fund, (or, in the case of a partnership, the foreign partner) not to carry on business in Canada solely by virtue of engaging Canadian service providers.

Safe Harbour Requirements Specifically, the Canadian safe harbour rules apply to “designated investment services” provided to a foreign fund in respect of the fund’s investments. The term “designated investment services” generally includes the provision of investment management and advice, brokerage services, investment administration services, back-office functions, custodian services and marketing services in respect of the marketing of fund units to non-resident investors. However, in some cases, the services to which the safe harbour rules apply must be in respect of only “qualified investments.”

Although the term “qualified investments” is quite broad and includes most types of investments, such as, debt securities, annuities, commodities, currencies, options and other types of derivative, there is one important limitation in respect of equity securities. An equity security of an entity (i.e., a corporation, partnership, trust, entity, fund or organization) that derives more than half its value from Canadian real and resource properties will generally not be a “qualified investment” if either (a) the security is not listed on a stock exchange, or (b) if it is listed, the foreign fund, either alone or together with non-arm’s length persons, owns greater than 25% of equity securities (of any class) of the entity. Consequently, a foreign fund that is intending to invest in securities of Canadian real property or resource companies will need to undertake additional tax planning to mitigate their tax risks associated with engaging Canadian service providers.

To be eligible for the protection offered by the safe harbour rules, a foreign fund must satisfy a number of other conditions. These conditions generally impose some restrictions on a foreign fund’s ability to own equity interests in a Canadian service provider and, perhaps more importantly, a foreign fund’s ability to raise capital from Canadian investors. If a foreign fund is intending to raise capital from

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Canadian investors, additional planning involving the use of feeder funds or partnerships can be undertaken to ensure the safe harbour rules still apply.

Foreign Hedge Funds raising capital from canadian investors To raise capital from Canadian investors, a foreign fund manager may consider establishing a Canadian domiciled fund either to serve as a feeder fund to an offshore master fund, or as a fund that parallels a foreign fund. In Canada, a number of different investment vehicles may be used, including trusts, limited partnerships and corporations. The relevant tax considerations in respect of each such type of vehicle are reviewed in the following article entitled Structuring a Canadian Hedge Fund.

There are some tax risks associated with foreign hedge funds permitting direct investment by Canadians. Regardless of whether the safe harbour rules are a relevant consideration or not, foreign hedge funds that permit direct investment into their funds by Canadian investors should be aware that taxable Canadian investors will need to consider whether the “offshore investment property” and “non-resident trust” rules in the Income Tax Act (Canada) are applicable to them, given their particular facts and circumstances. If these rules are applicable to a Canadian investor, a foreign hedge fund may have to deal with additional information requirements that will need to be

fulfilled in order to facilitate Canadian tax compliance by Canadian investors. In addition and as discussed above, foreign hedge funds that engage Canadian service providers face restrictions under the safe harbour rules which effectively restrict their ability to raise capital directly from Canadian investors unless the fund is structured as a partnership.

Foreign Hedge Funds investing in canada Foreign hedge funds wishing to pursue investment opportunities in Canada will be interested in minimizing withholding tax levied on Canadian sources of income earned either by the fund directly or, if the fund is a flow-through entity, by its non- Canadian investors.

Canadian income tax rules generally require that withholding tax at a rate of 25% be withheld from certain types of income paid to non-residents. Generally, corporate dividends and income distributions from a trust are subject to withholding tax; however, residents of countries with which Canada has a tax treaty may be entitled to a reduced rate of withholding tax as provided for in the treaty. Canadian income tax rules have eliminated withholding tax on certain interest payments paid to arm’s length parties, and thus non-resident investors generally no longer need to rely on a tax treaty to obtain a favourable withholding tax rate on interest.



Where a foreign hedge fund is resident in a country with which Canada has a tax treaty, the legal status of the foreign hedge fund in the country of formation may be an important consideration for determining whether the fund itself would be eligible for treaty benefits in respect of Canadian source income.

Generally, Canada seeks to tax gains arising on the disposition of “taxable Canadian property” (TCP), subject to any relief that may be available to a non-resident investor through a tax treaty. Recent amendments to the definition of TCP have significantly narrowed the types of securities that are TCP. Publicly listed shares and units of a mutual fund trust generally would not qualify as TCP unless the non-resident along with non-arm’s length person holds a significant holding in the corporation or trust and greater than 50 per cent of the fair market value of the shares or units is derived from Canadian real property or resource property.

canadian Hedge Fund managers establishing a Foreign Hedge FundA Canadian hedge fund manager that is considering establishing a foreign hedge fund to raise capital from non-Canadian investors must also consider the tax issues outlined above. In particular, a foreign fund managed by a Canadian manager will need to satisfy the safe harbour rules to ensure that the foreign fund is not, by virtue of receiving investment advice from the Canadian fund manager, considered to be carrying

on business in Canada.

In addition, consideration needs to be given to corporate governance of entities within the foreign hedge fund structure. In particular, where an entity within the foreign hedge fund structure has a board of directors or trustees that includes some Canadian-based directors or trustees, care must be taken to ensure that such entity is not, inadvertently, considered to be resident in Canada by virtue of having its “central management and control” located in Canada. Generally, the “central management and control” of an entity resides in the jurisdiction where the effective decision-making relating to high-level matters of the entity occurs. A certain degree of care and diligence is necessary to ensure that an offshore entity with Canadian based directors and/or trustees establishes, documents and continuously maintains an effective decision making process to ensure that the central mind and management of the entity is located in the desired jurisdiction at all relevant times.

conclusionThere has been increased interest in Canada recently by foreign hedge funds, particularly in light of the perceived strength of its financial system and its resource-rich economy. Whether looking to invest, raise capital or take advantage of the country’s burgeoning hedge fund service industry, foreign hedge funds can do this in a tax efficient manner.

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COMMODITIES FUTURES AND DERIVATIVES

Jennifer WainwrightPartnerAird Berlis LLP

background of Derivatives regulation in canada Hedge funds whose investment strategies utilize derivatives will be subject to securities, commodities futures and/or derivatives legislation in Canada. The legislation applicable to hedge funds and their managers generally regulates dealing in and advising with respect to derivatives. While securities legislation has been streamlined across the Canadian provinces, commodities futures and derivatives legislation has not. As a consequence, such legislation differs between the provinces and territories of Canada. The province or territory in which the hedge fund is formed and in which the hedge fund manager operates will dictate which provincial legislation is applicable.

Canadian legislation has historically distinguished between exchange traded derivatives, which are traded through exchanges based on standardized exchange contracts, and which settle with the exchange as counterparty, and over-the-counter or OTC derivatives. OTC derivatives are privately negotiated contracts between two parties, often using standardized documentation such as those developed by the International Swaps and Derivatives Association, Inc.

Three general approaches to the regulation of derivatives have developed in Canada.

exchange Traded Derivatives – securities regulationIn the first approach, exchanged traded derivatives are regulated under securities legislation. In the provinces who have adopted the first approach, securities legislation extends to cover “exchange contracts”. “Exchange contracts” are futures contracts



or options whose performance is guaranteed by a clearing agency and which are traded on an exchange pursuant to standardized terms and conditions set out in that exchange’s by-laws, rules or regulatory instruments, at a price agreed on when the futures contract or option is entered into on the exchange.

In these Canadian provinces, the definition of security in securities legislation includes OTC derivatives, and as a consequence, OTC derivatives technically are governed by securities legislation. However, securities regulators in these jurisdictions have exempted the application of their securities legislation to some OTC derivatives but not others, to capture only the OTC derivatives they wish to regulate (generally those involving the retail market).

exchange Traded Derivatives – commodities Futures legislationIn the second approach, exchange traded derivatives are regulated by commodities futures legislation which stands separate and apart from securities legislation. In the provinces which have adopted the second approach, any person or company engaging in or holding himself, herself or itself out as engaging in the business of advising others, including a hedge fund, as to trading in commodity futures

contracts and commodity futures options where the contract is entered into on a commodity futures exchange pursuant to standardized terms and conditions must be registered under commodities futures legislation.

In these Canadian provinces, a commodity futures contract or option that is not traded on a commodity futures exchange registered with or recognized by the applicable securities regulator or the form of which is not accepted under the applicable legislation, such as an OTC derivative, is considered to be a security. Dealing and advising in these instruments is regulated by securities legislation. Historically, there has been some uncertainty about the application of securities legislation to OTC derivatives, depending on whether they are cash settled or physically settled.

In one of the Canadian provinces which has adopted this approach, the provincial legislative body recently amended their securities legislation to contemplate the regulation of derivatives, although the legislation is not yet in force. Derivatives are defined to include options, swaps, futures contracts, forward contracts or other financial or commodity contracts or instruments whose market price, value, delivery obligations, payment obligations or settlement obligations

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are derived from, referenced to or based on an underlying interest (including a value, price, rate, variable, index, event, probability or thing), but do not include commodity futures contracts, commodity futures options, and specific contracts or instruments that are designated as not being derivatives. The legislation is platform legislation, meaning that the details of the legislation, including categories of registration, requirements for registration and ongoing compliance requirements will be contained in instruments enacted by the security regulator pursuant to its rule making authority in securities legislation. The platform derivatives legislation contemplates registration as a dealer or adviser for entities which deal in or advise with respect to derivatives. It is expected that detailed instruments will be published for comment in the future by the securities regulator outlining the material requirements related to market participants involved in derivative transactions in the subject province.

exchange Traded and oTc Derivatives – Derivatives legislationIn the third approach, derivatives legislation was enacted that applies to both exchange traded derivatives and OTC derivatives. The legislation imposes requirements on intermediaries of exchange traded derivatives as well as registration requirements on dealers

and advisers; however, the securities regulator in this province has exempted the application of the legislation where “accredited counter-parties” are involved.

All three legislative approaches impose capital, insurance and/or proficiency prerequisites to registration as a dealer or adviser and an ongoing compliance regime. The ongoing requirements are not dissimilar to the ongoing requirements imposed under securities legislation as outlined in other articles in this section (especially Securities Regulation and Compliance).

conclusionExchange traded derivatives in Canada may fall under securities legislation or commodities futures legislation and, in some cases (particularly concerning the counter-parties involved in a trade) both exchange traded and OTC derivatives may be eligible for exemptive relief. It is prudent to receive advice related to any derivatives trade with a Canadian counter-party to ensure compliance with legislation and, as appropriate, correct filing for exemptions that might apply.


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STRUCTURING A CANADIAN HEDGE FUND

Hedge fund products are designed for accredited investors and other exempt purchasers, as publicly offered mutual funds are precluded from using many hedge fund strategies. Attempts to access the broader retail market, for example by wrapping hedge fund strategies in a bank note product, have met with mixed results over the years.

legal structure - corporationHedge funds are not typically structured as corporations in Canada. Federal

income tax is imposed at the corporate level and therefore, depending on the type of income or capital gains earned by the fund, a corporation can be less tax efficient than other structures that are able to flow profits and/or losses through to investors. There are, however, advantages to the corporate structure including investor familiarity, certainty of limited liability, and certain tax advantages for funds that qualify as ‘mutual fund corporations’ or are set up as ‘switch corporations’.

Ronald M. Kosonic PartnerBorden Ladner Gervais LLP

Peter HayesPartner, National Director, Alternative InvestmentsKPMG LLP

James LoewenPartner, National Director, Asset Management KPMG LLP

The legal structure and terms of offering of a Canadian hedge fund are driven by many factors. Target market, investment strategy, investment risk, manager compensation, fairness and investor liability, liquidity and transparency must be considered in the context of Canadian tax, securities and commercial laws.



legal structure - limited partnershipHedge funds in Canada are often structured as limited partnerships. Limited partnerships are either ‘unitized’ (meaning that a limited partner’s interest is described in terms of a number of distinct units, which may be issued in different classes and series) or use more traditional capital accounting, depending on the number of investors, the terms of offering and back-office systems. Either way, a limited partnership allows fees to be charged at the series or investor level, and allows income or losses to be allocated most fairly.

A limited partnership is similar to a corporation in that it can offer limited liability to passive investors, but it has the added advantage of being a pure tax flow-through. Income and losses are allocated directly to individual investors, who can tax plan according to their own circumstances, subject to certain restrictions.

The limited partnership structure may enable key individuals to participate in revenues (both income and capital gains) through ownership of the general partner, rather than by earning a performance fee through a third-party investment manager. Both tax and securities law considerations impact this type of revenue participation structure.

There are some drawbacks. Limited partnerships are generally not eligible

investments for registered retirement plans, a potentially significant source of investment capital. And foundations will not typically invest in a limited partnership. Limited partnerships must allocate taxable income and gains to investors, but typically do not distribute cash (rather, profits are reinvested).

legal structure – TrustAnother common form of hedge fund vehicle in Canada is the commercial investment trust (or unit trust). A privately offered trust cannot offer the same degree of certainty of limited liability for investors as a corporation or limited partnership - this issue is not settled at common law and must be considered by hedge funds that employ leverage, short sales or aggressive investment techniques that increase the risk that the liabilities of the fund could exceed its assets at a given time.

To avoid taxation at the trust level (at the top marginal rate for individuals), a commercial trust must distribute taxable income and capital gains to unitholders, to be taxed in their hands. It is common practice for distributed income to be automatically reinvested in the trust by the issuance of additional units. As with a limited partnership, this could result in investors being taxable on income or capital gains without actually receiving a cash distribution. Unlike a limited partnership, a trust cannot flow losses out to its unitholders (but can carry

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them forward in accordance with the normal income tax rules).

The unit trust is the preferred structure for hedge fund managers who wish to offer the fund to foundations, pension plans, registered retirement savings plans and other non-taxable investors. Trust units can be qualified for investment by registered plans if they are redeemable on demand at their net asset value and the fund is a ‘mutual fund trust’ or the fund applies under the Income Tax Act (Canada) to become a registered investment. The drawback of registering a fund as a registered investment is that the fund manager is then limited as to the types of instruments the fund may invest in, and many popular hedging techniques would not be permitted. A unit trust that can qualify as a mutual fund trust (the trust must have more than 150 unitholders, each holding a block of units having a net asset value of at least $500) has the added advantage of being able to make an election that effectively treats certain income from Canadian-source investments as capital gains, a benefit for taxable investors.

other structuring considerations - classes and seriesIt is common practice for hedge funds to issue units in separate classes and separate series that provide for different fees, profit-sharing arrangements, lock-up periods and other redemption terms. Separate series or sub-series may be created with each new issue of

units (using ‘series accounting’) so that performance can be separately tracked for the purpose of calculating fees and fairly distributing income, gains and losses. There are practical constraints and potential tax consequences in Canada that warrant caution when issuing hedge fund securities in classes and series, depending on the legal structure of the fund, the fee calculation methodology used and the desired tax consequences to investors. Equalization accounting presents similar challenges in Canada.

other structuring considerations - Jurisdictional considerationsAs mentioned earlier, Canada is made up of 10 provinces and 3 territories, each with their own securities and commercial legislation. Where the Fund is created and/or domiciled in Canada can impact taxation, securities law requirements (including the nature and extent of financial reporting) and commercial business registrations.

other structuring considerations - layeringLayering of funds in one or more legal structures can help achieve multiple objectives. The advantages of a trust (e.g., access to registered plan money) can be grafted onto the advantages of a limited partnership (flexibility and certainty of limited liability) by creating a ‘top trust’ that invests in an underlying limited partnership where the portfolio is managed. However,



there are challenges and potential drawbacks to such a structure.

Funds of funds are quite common in Canada. Funds of funds that are subject to reporting requirements imposed by Canadian securities legislation typically require relief from strict compliance because of mismatches in areas such as fiscal year ends and financial reporting by underlying funds.

Master-feeder funds within Canada are not typical, and the use of Canadian feeder funds to invest in an international master fund structure is hampered by the size of the market and by detrimental Canadian federal tax laws.

Derivative instruments are sometimes used to give a Canadian fund exposure to a reference fund’s returns without requiring a direct investment.

offering memorandumCanadian hedge funds sold to the exempt market generally do not require the use of an offering memorandum, but most do use some form of marketing document, term sheet or information memorandum that would be treated by Canadian securities legislation as an ‘offering memorandum’. There is no mandated content (except in very narrow circumstances), but investors are given statutory rights of action or rescission if the offering

document contains a material misrepresentation, which can include the omission of a material fact. Certain provinces in Canada require these rights to be described in the offering document.

redemption TermsHedge funds in Canada typically offer monthly redemptions, with notice periods ranging from a few days to a few months, depending on the liquidity of the investment portfolio. Funds that have less liquidity or that wish to minimize portfolio disruption and cash-drag may only offer quarterly or even yearly redemptions. Many funds give the fund manager broad powers to suspend or delay redemptions during market crises. Alternatively they may impose redemption gates (e.g., no more than 10% of units will be redeemed in any month) in order to protect investors who wish to stay in the Fund. Some funds, typically those holding illiquid or restricted securities (e.g., securities of private companies), may impose a holdback (e.g., 5% of redemption proceeds) pending completion of the year-end audit. Funds may also pass on to the redeeming investor the costs associated with the redemption, including brokerage costs of liquidating positions, but

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will typically cap the deduction at 2% of proceeds.

management and performance FeesFees charged to hedge funds in Canada continue to follow the traditional “2+20” model: a management fee, which is typically between 1% and 2% per annum of the net asset value (NAV) of the fund, paid monthly; and a performance fee of between 10% and 20% of the appreciation in the NAV of the fund or the units of the fund held by an investor, paid quarterly or yearly. Performance fees are usually subject to a “high water mark”, but it is less common in Canada to have a “hurdle rate” over which the fund or unit must perform (above the high water mark) before the performance fee is paid. In a limited partnership structure, it is possible to have the general partner receive a share of revenues, rather than pay a performance fee to the fund manager, subject to tax and regulatory considerations.

Hedge fund managers may also charge an early redemption fee of between 3% and 5% of the redeemed units’ NAV, which fees are typically payable if the units are redeemed within the first year of their issue (“early redemption” might be as short as 90 days or as long as three years). Some or all of early redemption deductions may be retained

in the fund.

side letters and investor rightsSide letters have come under considerable scrutiny by Canadian regulators and are generally not considered in a positive light. The potential conflicts of interest that they create can be a litigation minefield for investment managers. Many of the benefits sought by an investor in a side letter can be given through the issue of a separate class of fund securities, provided the constating documents provide the flexibility to do so. Nonetheless, granting greater transparency and greater liquidity to certain investors, however given, is discouraged, as those preferred investors could learn of a problem and redeem out of the fund before other investors might be offered the opportunity to redeem.

side pocketsSide pockets are sometimes used in Canada as a useful tool for dealing with illiquid investments within a relatively liquid portfolio; however Canadian taxation can make the use of separate classes or pools to side-pocket the illiquid investments problematic. Funds may have to use other means to delay payment of the value of illiquid holdings, creating a legal grey area as regards the rights of investors after



redemption of all their units.

accounting and reportingPrivate investment funds in Canada must prepare financial statements in accordance with Canadian Generally Acceptable Accounting Principles (GAAP). In addition, national securities regulation requires additional financial statement disclosures for most private investment funds domiciled in Ontario (being those subject to National Instrument 81-106). These requirements include:

• Annual audited financial statements must be provided to investors and securities regulators within 90 days of year-end (although an exemption from filing with the regulators is available).

• Semi-annual unaudited financial statements must be provided to investors within 60 days of the semi-annual period-end.

• Financial statements must include a statement of investment portfolio for the current period and statements of net assets, operations and changes in equity for the current and comparative periods, as well as notes.

Investment funds will likely be required to switch to International Financial Reporting Standards (IFRS) from Canadian GAAP effective January

1, 2014. Current Canadian GAAP for investment funds is similar in principle to IFRS, with some potential differences related to investee consolidation, presentation of investor equity and various disclosures.

conclusionCanadian securities laws and practices offer many options for structuring funds in accordance with manager requirements and investor interests.

raising capital

54 |

THE RISE OF ALTERNATIVE INVESTMENTS IN CANADA: THE CASE FOR EMERGING MANAGERS

Appetite for all things Canadian, from both a domestic and international perspective, has been steadily on the rise, and has correspondingly rippled into Canada’s alternative investment landscape. Then it should come as no surprise to the reader that a new “emerging” class is rising, that of the emerging manager in alternative investments. While investors have long benefitted from the return profile of traditional asset classes within the Canadian investment landscape, a confluence of events has led to substantial growth in the alternative sector: a compressed yield environment in long-only credit

instruments, generally rangebound global equity markets, and the desire to buttress a portfolio with non-correlated sources of return, to name but a few. These factors, coupled with Canadian allocations to alternatives historically lagging our international peers, has helped to set the stage for further growth. Within the backdrop of roughly $70 trillion in investable assets, the $2 trillion global hedge fund industry has now matched pre-crisis allocation levels. Meanwhile, only 15% of the roughly 250 Canadian alternative funds post assets under management in excess of $100 million. Canadian emerging managers remain relatively

Claude RobillardExecutive DirectorCIBC Prime Services Group

2nd mover advantage: canadian emerging managersCanada has often been described as the emerging market play without the emerging market risk – we find ourselves, fortunately, at the intersection of global interests with a strong commodities sector and robust financial architecture on offer.

RAISING CAPITAL


early entrants in a well-established industry at a potentially auspicious time. And while Canadian managers were not immune to the crisis of 2008, the number of hedge funds in Canada is, in lockstep with global peers, also approaching pre-crisis levels.1

Greater breadth of strategies, Deeper pool of investorsAnd therein lies the opportunity. Industry polls suggest that allocations will continue along a positive trajectory. The thesis that has proven successful in the majority of global financial centres – that of a deep and broad pool of alternative investment strategies available to a growing field of institutional and HNW investors – bodes well for continued growth in the domestic market. The fact that roughly 40% of the alternative universe in Canada is represented by equity long/short strategies – that number was estimated at 50% roughly five years ago –supports the premise that new entrants have different approaches on offer. Long-biased equity managers once represented the majority in Canada, and now have given up some territory to market neutral or market-cycle agnostic managers, allowing investors the opportunity to tactically invest

across an array of market themes. A greater variety of strategies is at the ready while the amount of capital that can be deployed is growing steadily, in an increasingly global and fluid capital market. As The Economist pointed out not long ago , the world now has more millionaires than Australians, and over 1,000 billionaires – roughly 5 times more than just 15 years ago.2

right place, right Time, right-sized?Meanwhile emerging managers have, arguably, competitive advantages over “incumbents”. An ability to “adapt to changing market conditions and exploit new opportunities”3 or, put differently, a degree of agility, supported by evidence of statistically higher returns, has been presented by numerous research outlets. As there is no free lunch, the higher return profile may be associated with a higher degree of risk; risk that may be offset by a lack of cross-correlation to an investor’s other allocations.

Many strategies are, arguably, right-sized for the Canadian market, and not infinitely scalable, though one can argue that the majority have not yet brushed up against capacity constraints – a potential marriage of

1 AIMA: AIMA Canada Hedge Fund Primer, June 2010 2 The Economist: More millionaires than Australians – January 20, 20113 HFR Asset Manager: Emerging Manager Outperformance

http://aima-canada.org/doc_bin/AIMA_Primer.pdf

http://www.economist.com/node/17929057

http://www.mannaam.com/sites/default/files/HFR%20Emerging%20Manager%20Outperformance.pdf

56 |

timing and opportunity for Canada’s Emerging Manager set. Canadian managers, meanwhile, are not subjected to a crowded market, as proprietary trading activity has been significantly pared down in the domestic market, and waning in international markets. Correspondingly, former traders and analysts with strong pedigrees whose experience has often been framed within the construct of institutional-calibre risk management and governance, find themselves leading rapidly-growing independent asset management firms.

emerging managers, established infrastructureMeanwhile, as managers grow, they are supported by a strong network of service providers and business partners, and a well-established regulatory framework. World-class administrators, consultants, advisors and prime brokers with local expertise and global reach are on hand to help facilitate business operations and expansion. While the majority of Canada’s alternative asset managers are at an earlier stage of their life cycle – often with tenures under five years – they can draw from a deep well of agents, advisors and investors.

And Canada, with 0.5% of the world’s population contains three of the world’s largest pension funds4, two of the world’s largest insurance companies5 and a 1st place ranking on the World Economic Forum’s list of the world’s soundest banking systems. Incidentally, many Canadian Prime Brokers are wholly-owned by Canada’s banks, further helping to bolster a sense of stability as local and global investors consider allocations to alternative managers.

performance and capital preservationEmerging managers in Canada, and their “well-established” confrères, have a bright future ahead. Headwinds in global markets and a challenging environment for traditional asset classes have investors on the hunt for new sources of return. As long as emerging managers focus on performance, continue to evidence replicable investment theses, and generate returns delineated from beta, they will continue to command attention. Couple that with a judicious approach to risk management, best practices in reporting, corporate governance, and transparency and they will retain a loyal following.

RAISING CAPITAL

4 P&I / Towers Watson Top 300 Pension Funds: Analysis as at 2010 year end5 Forbes Global 2000 list6 World Economic Forum: The Global Competitiveness Report 2011 – 2012

http://www.towerswatson.com/assets/pdf/5351/TW-PI-300.pdf

http://www.forbes.com/lists/2010/18/global-2000-10_The-Global-2000_IndName_12.html

http://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdf


And when assessing the emerging manager landscape, the investor may wish to focus on manager talent and pedigree, and de-emphasize the importance of a limited track record. As Einstein once stated: “Everything that can be counted does not necessarily count; and everything that counts cannot necessarily be counted.”

This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change. CIBC and CIBC World Markets Inc., their affiliates, directors, officers and employees may provide financial advisory services, investment banking or other services for or have lending or other credit relationships with hedge fund managers. © CIBC World Markets Inc. 2012.

58 |

FOREIGN INVESTORS IN CANADIAN HEDGE FUNDS

Investors should note that Canadian securities law is individually regulated by the thirteen Canadian provinces and territories. Although there is harmonization among the various jurisdictions with respect to certain matters, there is no centralized securities administrator in Canada along the lines of the Securities and Exchange Commission in the United States. As such, in this article we will focus on hedge funds that are domiciled in the province of Ontario, which is home to the majority of Canadian hedge fund

managers - not to detract from the many funds in other provinces and territories.

While the term “hedge fund” is not a defined term under Ontario law, it generally references a redeemable investment fund (defined as a “mutual fund” under Canadian securities law) whose securities are privately placed to sophisticated investors. Unlike mutual funds that are offered to the general public by way of prospectus and that are required to abide by more

Cathy SingerPartnerNorton Rose Canada LLP

Michael BunnAssociateNorton Rose Canada LLP

Barry SegalPartnerNorton Rose Canada LLP

As the number and size of hedge funds operated by Canadian fund managers continues to grow we have seen increased interest in these products from non-Canadian investors. In this article, we will provide a brief overview of issues that a non-Canadian investor should be aware of when considering an investment in a Canadian domiciled hedge fund.

RAISING CAPITAL


conservative investment objectives, strategies and restrictions, hedge funds are permitted unlimited latitude in their investment choices, constrained only by certain conflict of interest provisions outlined below and restrictions imposed by contract between the hedge fund and its investors.

investor QualificationsIf an Ontario hedge fund is placing securities with an investor that is domiciled or resident outside of Ontario then Ontario investor qualification requirements will not apply provided that reasonable precautions are taken by the Ontario hedge fund to ensure that the securities will not be redistributed into Ontario.

However, the Ontario hedge fund will want to ensure that any investor qualification requirements in the investor’s home jurisdiction have been met and that the securities law requirements in the investor’s home jurisdiction do not require the hedge fund to prepare and file a prospectus or similar document. The Ontario hedge fund will also want to determine whether the placement of securities with the investor will result in the hedge fund or its manager having to make any filings or seek any approvals from any regulatory authority in the investor’s home jurisdiction. The Ontario hedge fund may have to obtain comfort with respect to these matters by engaging the services of local counsel in the investor’s home jurisdiction and by having the investor make representations regarding these matters in the subscription agreement that it completes.

offering DocumentAlthough not legally required, Ontario hedge funds will generally provide investors with an offering document prior to their investment in the hedge fund. The offering document will detail, among other things, the investment objectives, investment strategies and investment restrictions of the hedge fund. The offering document is a contract between the investor and the hedge fund and the investor can sue the hedge fund should they suffer a loss as a result of the hedge fund unilaterally breaking the terms of the contract (for example, by violating an investment restriction contained in the offering memorandum without first obtaining the consent of investors). Note that although Ontario law provides investors with certain “statutory” rights of action against the hedge fund should there be a misrepresentation in the hedge fund’s offering document, these statutory rights do not apply to non-Ontario investors (who instead have to sue under common law). Nevertheless, as Ontario and non-Ontario residents generally receive identical offering documents from a hedge fund, the existence of the statutory rights of action for Ontario residents will likely result in the hedge fund manager paying particular attention to the accuracy of disclosure in the offering memorandum (which is of benefit to all investors).

statutory protectionsOntario domiciled hedge funds offer investors certain statutory protections. Set out below are a number of these protections.

60 |

Manager Registration The manager of an Ontario hedge fund is required to register with the Ontario Securities Commission in one or more categories depending on the functions that it performs for the hedge fund. As part of the registration process, the manager must establish that it meets minimum capital and insurance requirements and that certain of its employees meet specified proficiency requirements. The fact that all managers of Ontario hedge funds must undergo a rigorous registration process should provide investors with a level of comfort regarding the entity that manages the Ontario hedge fund in which they are investing. For more details on registration issues, please see the article entitled Securities Registration and Compliance.

Financial StatementsEach Ontario hedge fund is required to prepare audited annual financial statements for its most recently completed financial year that include, among other things, (i) a statement of changes in net assets for each of that financial year and the immediately preceding financial year and (ii) a statement of investment portfolio as at the end of that financial year. Similar unaudited financial statements are required for each interim six month period.

The audited annual financial statements must be sent to investors on or before the 90th day after the hedge fund’s financial year end, with the deadline for interim statements being the 60th day after the six month interim period for the hedge fund. The auditor’s report accompanying the annual financial statements must be

signed by a person or company that is authorized to sign an auditor’s report by the laws of a jurisdiction in Canada and must meet the professional standards of that jurisdiction. The preparation of audited annual financial statements provides investors with an impartial third party review of the financial condition and performance of the Ontario hedge fund in which they are investing.

TaxationThe Canadian tax implications of an investment are important for a non-Canadian investor to consider when deciding whether to invest in an Ontario hedge fund. The following is a general outline and is not specific tax advice. An investor should always consult its own Canadian tax advisor prior to making an investment in an Ontario hedge fund.

The Canadian tax consequences to a non-Canadian of investing in an Ontario hedge fund will depend on the structure of the fund as well as the other investors in the fund. Many funds are structured as partnerships, although trust structures are also common.

A non-Canadian investor in an Ontario hedge fund that is a partnership will be taxable in Canada on its share of the fund’s income (whether or not distributed) to the extent that the investor is considered to carry on business in Canada. This will be determined by reference to a host of factors including the nature and the location of assets held by the fund and the type and frequency of trading activity in the fund. The investor may also be taxable in Canada if the fund realizes capital gains from

RAISING CAPITAL


the disposition of “taxable Canadian property” which includes certain direct or indirect interests in Canadian real property and resource property. The applicability of relief from Canadian tax under a relevant tax treaty between the investor’s country of residence and Canada should also be considered.

An Ontario partnership that has non-Canadian investors will be treated as a non-resident of Canada for tax purposes which may result in adverse tax consequences to the fund and its investors. This is particularly the case for funds which expect to earn Canadian source interest or dividends from investments. Such partnerships may not permit direct investment by non-Canadians. In that case, a Canadian corporation is often used by non-Canadian investors to make the investment. The Canadian corporation will be taxable in Canada on its share of partnership income and capital gains (whether or not distributed). Distributions from the Canadian corporation to the non-Canadian investor will generally be subject to Canadian withholding tax at a rate of 25%, or less (generally either 5% or 15%) under the terms of an applicable tax treaty.

A non-Canadian investor in an Ontario hedge fund that is formed as a trust is not directly taxable on the income or capital gains earned by the trust, but may be subject to Canadian withholding tax on amounts distributed from the trust. The rate of withholding tax on trust distributions is 25% unless a treaty-reduced rate applies (generally 15%). If the fund qualifies as a “mutual fund

trust” for tax purposes (i.e., having over 150 unitholders and meeting certain other criteria), the 25% withholding tax will not apply to distributions of capital gains of the fund (other than gains arising from dispositions of “taxable Canadian property”) provided the fund makes the appropriate designation in its tax return for the year. If the fund is not a mutual fund trust and it has non-resident investors, the fund may be subject to an additional 36% tax on its income from dispositions of “taxable Canadian property” and businesses carried on in Canada.

Non-Canadians may also be taxable in Canada if they realize a gain on the sale or other disposition of their investment in an Ontario hedge fund and their interest in the fund constitutes “taxable Canadian property”. An interest in an Ontario trust (other than a mutual fund trust) or partnership may be “taxable Canadian property” if, at any time during the prior 5-year period, more than 50% of the fair market value of the interest was derived directly or indirectly from Canadian real property, resource properties and certain other properties. If a hedge fund is a mutual fund trust, certain ownership thresholds must be satisfied in addition to the test above before an interest in the fund will be considered “taxable Canadian property”.

Foreign investors might be pleased to know that, given the tax considerations detailed above, many Canadian hedge fund managers operate parallel investment vehicles domiciled in tax neutral jurisdictions.

62 |

THE CANADIAN ASSET RAISING LANDSCAPE

There are compelling reasons to invest with a Canadian manager and Canadian funds have been highly successful gathering assets from high net worth individuals and family offices, both domestically and globally. Canadian investors value the diverse strategies and expertise that Canadian managers provide while global investors are attracted to many additional advantages of Canadian hedge funds:

• The view of Canada as a safe haven has increased the attractiveness of Canadian alternative investment managers to global investors.

• Canada’s financial industry is well regulated.

• Canada is home to world-class service providers including prime brokers, administrators and law firms.

• The smaller size of many Canadian funds enables the managers to be nimble and quickly capitalize on opportunities in the market that might elude larger funds.

• Far from being purely a commodity play, Canadian fund managers have expertise in executing a variety of sophisticated Canadian and global strategies.

The canadian investor landscapeThe primary allocators to alternative investments in Canada fall into two broad categories: institutional and high

Katrina RempelVice President, Prime Brokerage Services – Capital IntroductionBMO Capital Markets

The Canadian alternative investment space is coming of age. Canadian investors from large institutions to high net worth individuals are embracing hedge fund investments. Difficult and volatile markets have left investors searching for higher returns and protection from downside risk.

RAISING CAPITAL


net worth which includes family offices, multi-family offices and High Net Worth Individuals (HNWIs).

institutionsThe largest Canadian institutions and pension plans have been active hedge fund participants for many years, executing sophisticated global investment programs. In recent years, mid-tier institutions have been increasingly likely to consider allocations to hedge funds as a means to achieve their investment goals. Many institutions that do not currently allocate to hedge funds are on an educational learning curve. It is likely that this process will bear fruit for the hedge fund industry in the near future, both for Canadian and global managers.

Institutions that, in the past, have invested in Funds of Hedge Funds are more likely to invest directly with single managers as their familiarity with hedge funds and their knowledge level increases. Many organizations are willing to hire external expertise to assist with investment decisions. Many large Canadian institutional investors hire a consultant to source alternatives while the remainder have in-house departments that focus on alternative investments.

Although many Canadian institutions have been historically reluctant to allocate to funds that have assets under management of less than $1 billion (which has historically precluded many Canadian hedge fund managers), this is now changing as more and more investors have come to appreciate the outperformance of smaller, newer and niche hedge funds. This has led to success for several Canadian funds in raising institutional assets domestically.

High net Worth – Family offices and HnWisCanadian family offices are knowledgeable and sophisticated investors. Many family offices are established organizations with experienced investment teams that do extensive in-house research. Their smaller size and flexible investment mandates enable them to allocate to managers of all sizes. Along with HNWIs they have been the largest purchasers of Canadian hedge funds to date.

Canada is the world’s seventh-largest market for high net worth and ultra high net worth individuals: they numbered approximately 300,000 at the end of 2010 which is an increase of about 12% as compared to 2009.1

Canada’s population of HNWI is

1 Merrill Lynch Global Wealth Report

http://www.ml.com/media/114235.pdf

64 |

defined as individuals with investable assets of $1 million or more. This group represents more than 60% of the assets under management in Canada.2

While many HNWI have the knowledge and skills to execute their own investment programs, others work with a multi-family office (MFO) for assistance in the deployment of both traditional and alternative assets. An MFO is an independent organization that provides a variety of services to multiple families for the purpose of supporting their wealth. In addition to allocating to hedge funds on behalf of their clients, some MFOs may build a proprietary alternative investment vehicle for their clients.

HnWi advice at canadian broker-DealersCanada has a large number of wealth advisors who target HNWI through the broker-dealer retail networks that are associated with the six largest banks in Canada. Many of these advisors are seeking additional ways to add value to their client’s portfolios and will allocate to increasingly sophisticated investment vehicles, such as hedge funds, on behalf of their clients. The benefits include diversification, higher returns and an improved risk-return profile.

Managers that want to sell their funds through the bank-owned brokerage firms’ retail networks must meet some stringent requirements before they are approved by the various distribution channels. Their criteria vary among organizations but at a minimum, the fund must be available for sale on FundSERV (a third-party investment fund processing system) and the managers must have an established track record (usually three years). Many funds that have been approved for sale in the retail networks have seen material allocations.

Growth Going ForwardIt is a sign of continuing optimism that the Canadian alternative investment industry shows growth in all areas including fund managers, investors and service providers. Canadian managers continue to receive inflows into a broadening array of strategies from both Canadian and overseas institutional and HNWI investors.

RAISING CAPITAL

2 Globe and Mail, Are You Ready For a Wealth Manager, January 8, 2010

http://www.theglobeandmail.com/globe-investor/personal-finance/home-cents/are-you-ready-for-a-wealth-manager/article1423789/

66 |

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The Horizons BetaPro Bear Plus exchange traded funds (“HBP Bear Plus ETFs”) use leveraged investment techniques that magnify gains and losses and result in greater volatility in value. HBP Bear Plus ETFs are subject to leverage risk. HBP Bear Plus ETFs along with the Horizons BetaPro Inverse exchange traded funds (“HBP Inverse ETFs”) are subject to aggressive investment risk and price volatility risk, which are described in their respective prospectus. Each HBP Bear Plus ETF seeks a return that is 200% and each HBP Inverse ETF seeks a return that is 100% of the inverse performance of a specified underlying index, commodity or benchmark (the “Target”) for a single day. Due to the compounding of daily returns, an HBP Bear Plus ETF’s and an HBP Inverse ETF’s returns over periods other than one day will likely differ in amount and possibly direction from the performance of it’s respective Target for the same period. Investors should monitor their holdings, as frequently as daily, to ensure that they remain consistent with their investment strategies.Commissions, management fees and expenses all may be associated with an investment in exchange traded products managed by Horizons ETFs Management (Canada) Inc. The exchange traded products managed by Horizons ETFs Management (Canada) Inc. are not guaranteed, their values change frequently and past performance may not be repeated. Please read the prospectus before investing.

(Please see also page 96)

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member DirectoryHedge Fund and FoHF managers

84 |

aberdeen asset management inc. Global Fund Of Hedge Fund Provider

Member since: 2012

renee arnold [email protected] | +1 416 777 5570 Toronto, ON

www.aberdeen-asset.ca

acorn Global investments inc. Systematic Global Macro

Member since: 2010

Gordon corbett [email protected] | +1 905 257 0773 ext 102 Oakville, ON

www.acorn.ca

arrow capital management inc. Funds of Hedge Funds and Canadian Hedge Fund Managers

Member since: 2001

rob parsons [email protected] | +1 416 323 3199 Toronto, ON

www.arrow-capital.com

aurion capital management inc.

Member since: 2010

Grant bunker [email protected] | +1 416 866 2445 Toronto, ON

www.aurion.ca

MEMBER DIRECTORY HEDGE FUND AND FoHF MANAGERS

MEMBER DIRECTORY: HEDGE FUND AND FoHF MANAGERS


blackheath Fund management inc. Managed Futures – Sentiment and Volatility Arbitrage

Member since: 2009

christopher Foster [email protected] | +1 416 363 2962 Toronto, ON

www.blackheath.ca

blumont capital corporation Long-Short Equity

Member since: 2003

James Wanstall [email protected] | 1 416 202 6695 Toronto, ON

www.blumontcapital.com

clairwood capital management inc. Long-Short Equity

Member since: 2011

Glenn paradis [email protected] | +1 647 404 8145 Toronto, ON

www.clairwoodcapital.com

crystalline management inc. Canada Relative Value and Arbitrage

Member since: 2009

claude perron [email protected] | +1 514 284 0248 ext 222 Montréal, QC

www.arbitrage-canada.com

86 |

Dexia asset management – canadian representative office FoHF and 15 single strategies

Member since: 2012

christophe Vandewiele [email protected] | +1 416 974 9055 Toronto, ONwww.dexia-am.com

Di Tomasso Group inc. Long-Short Commodity Trading Advisor

Member since: 2011

John Di Tomasso [email protected] | +1 250 744 1650 Victoria, BC

www.ditomassogroup.com

Fiera capital inc. Global Macro, Market Neutral, Long-Short Equity, Fixed Income Funds

Member since: 2004

Jim craven [email protected] | +1 416 955 4898 Toronto, ON

www.fierasceptre.com

Front street capital Long-Short Equity and Income

Member since: 2006

chris Fontana [email protected] | +1 416 915 2439 Toronto, ON

www.frontstreetcapital.com




Fiera capital inc. Global Macro, Market Neutral, Long-Short Equity, Fixed Income Funds

Member since: 2004

Jim craven [email protected] | +1 416 955 4898 Toronto, ON

www.fierasceptre.com

Galileo Funds inc. Long-Short Canadian Equity

Member since: 2012

evelyn Foo [email protected] | +1 416 594 3633 Toronto, ON

www.galileofunds.com

Garrison Hill capital management inc.Fundamentally-driven Global Macro

Member since: 2008

michael Yhip [email protected] | +1 416 203 2212 Toronto, ON

www.ghcm.ca

Gcic ltd. Long-Short Equity

Member since: 2006

christian postance [email protected] | +1416 365 5661 Toronto, ON

www.dundeewealth.com

Goodwood inc. Equity Long-Short, Activist

Member since: 2002

curt cumming [email protected] | +1 416 203 2522 Toronto, ON

www.goodwoodfunds.com

88 |

Groundlayer capital inc. Long-Short North American Equity (Long Bias)

Member since: 2007

robert Grundleger [email protected] | +1 416 365 2301 Toronto, ON

Hillsdale investment management inc. Quantitative Long-Short Global Equity

Member since: 2002

ian pember [email protected] | +1416 913 3920 Toronto, ON

www.hillsdaleinv.com

Hr stratégies inc. Funds of Hedge Funds

Member since: 2004

claude Godon [email protected] | +1 514 393 3515 Montréal, QC

www.hrstrategiesinc.com

integrated managed Futures corp. Commodity Trading Advisor

Member since: 2003

paul patterson [email protected] | +1 416 363 6526 Toronto, ON

www.iamgroup.ca/managedfutures




Jc clark ltd. Long-Short US & Canadian Equity

Member since: 2003

sean Wynn [email protected] | +1 416 361 4533 Toronto, ON

www.jcclark.com

JDm investment partners ltd. Concentrated North American Equity

Member since: 2012

James maxwell [email protected] | +1 416 996 1113 Ottawa, ON

www.ipfund.ca

kensington capital partners ltd. Funds of Hedge Funds

Member since: 2008

eamonn mcconnell [email protected] | +1 416 362 9030 Toronto, ON

www.kcpl.com

landry morin inc. Long-Short Equity

Member since: 2010

richard morin [email protected] | +1 514 985 5225 Montréal, QC

www.landrymorin.com

Groundlayer capital inc. Long-Short North American Equity (Long Bias)

Member since: 2007

robert Grundleger [email protected] | +1 416 365 2301 Toronto, ON

Hillsdale investment management inc. Quantitative Long-Short Global Equity

Member since: 2002

ian pember [email protected] | +1416 913 3920 Toronto, ON

www.hillsdaleinv.com

Hr stratégies inc. Funds of Hedge Funds

Member since: 2004

claude Godon [email protected] | +1 514 393 3515 Montréal, QC

www.hrstrategiesinc.com

integrated managed Futures corp. Commodity Trading Advisor

Member since: 2003

paul patterson [email protected] | +1 416 363 6526 Toronto, ON

www.iamgroup.ca/managedfutures

KENSINGTONsmart alternatives TM

90 |

lawrence park capital partners ltd. Fixed Income

Member since: 2011

David Fry [email protected] | +1 416 646 2180 Toronto, ON

www.lpcapitalpartners.com

man investments canada corp. Alternative Investments Manager

Member since: 2006

Toreigh stuart [email protected] | +1 416 775 3600 Toronto, ON

www.maninvestments.com

mapleridge capital corporation Managed Futures

Member since: 2008

cheryl Davidson [email protected] | +1 416 733 9818 ext 241 Toronto, ON

www.mapleridgecapital.com

marret asset management inc. Fixed Income Arbitrage

Member since: 2006

Denise Dillon [email protected] | +1 416 306 3895 Toronto, ON

www.marret.ca




niagara capital partners ltd. Macro / Managed Futures

Member since: 2004

David rothberg [email protected] | +1 416 350 2911 Toronto, ON

www.niagaracapital.ca

northwater capital management inc. Intellectual Property Funds and Risk Parity Portfolios

Member since: 2007

neil simons [email protected] | +1 416 360 5435 Toronto, ON

www.northwatercapital.com

polar securities inc. US Long-Short Equity and Canadian Multi-Strategy

Member since: 2003

Tom sabourin [email protected] | +1 416 369 4459 Toronto, ON

www.polarsecurities.com

rDa capital inc. Multi-Strategy

Member since: 2010

François magny [email protected] | +1 514 985 2107 Montréal, QC

www.rdacap.com

92 |

ross smith asset management inc. Capital Structure Arbitrage

Member since: 2011

Weston pring [email protected] | +1 403 294 6893 Calgary, AB

www.rsam.ca

rosseau asset management ltd Event Driven / Special Situations

Member since: 2003

Jow lee [email protected] | +1 416 777 0712 Toronto, ON

www.rosseau.com

rp investment advisors Investment Grade Fixed Income Long-Short

Member since: 2011

Dannielle ullrich [email protected] | +1 647 776 1777 Toronto, ON

www.rpia.ca

salida capital lp Long-Short Equity - Natural Resources

Member since: 2005

Dejan knezevic [email protected] | +1 416 849 2564 Toronto, ON

www.salidacapital.com




ross smith asset management inc. Capital Structure Arbitrage

Member since: 2011

Weston pring [email protected] | +1 403 294 6893 Calgary, AB

www.rsam.ca

rosseau asset management ltd Event Driven / Special Situations

Member since: 2003

Jow lee [email protected] | +1 416 777 0712 Toronto, ON

www.rosseau.com

rp investment advisors Investment Grade Fixed Income Long-Short

Member since: 2011

Dannielle ullrich [email protected] | +1 647 776 1777 Toronto, ON

www.rpia.ca

salida capital lp Long-Short Equity - Natural Resources

Member since: 2005

Dejan knezevic [email protected] | +1 416 849 2564 Toronto, ON

www.salidacapital.com

shoreline West asset management Multi-Strategy

Member since: 2011

Greg sullivan [email protected] | +1 604 737 1445 Vancouver, BC

sigma analysis & management ltd Managed Account Operator

Member since: 2009

luis seco [email protected] | +1 416 907 0716 Toronto, ON

www.sigmanalysis.com

silvercreek management inc. Short-equity biased, Special situations-value-based

Member since: 2003

bryn Joynt [email protected] | +1 416 485 3953 Toronto, ON

www.silvercreekmanagement.com

spartan Fund management inc. Multi-Strategy

Member since: 2009

Gary ostoich [email protected] | +1 416 601 3171 Toronto, ON

www.spartanfunds.ca

94 |

sprott asset management Long-Short Equity, Fixed Income/Currency & Asset-Based Lending

Member since: 2004

James r. Fox [email protected] | +1 416 943 6718 Toronto, ONwww.sprott.com

summerwood capital corp. Currency - Quantitative, Directional and Exotic Alpha

Member since: 2006

phil schmitt [email protected] | +1 416 628 8400 Toronto, ON

www.summerwoodgroup.com

sW8 asset management, inc. Multi-Strategy, North American Equity Long-Short focus

Member since: 2011

Danielle skipp [email protected] | +1 647 340 6272 Toronto, ON

www.sw8.ca

Third eye capital management inc. Credit

Member since: 2008

arif n. bhalwani [email protected] | +1 416 601 9824 Toronto, ON

www.thirdeyecapital.com




Vertex one asset management, inc. Multi-Strategy/Event-driven

Member since: 2002

Jeff mccord [email protected] | +1 604 681 5787 Vancouver, BC

www.vertexone.com

Vision capital corporation Long-Short REIT/Real Estate Focused

Member since: 2011

Jeffrey olin [email protected] | +1 416 362 6546 Toronto, ON

www.visioncap.ca

Waratah advisors Long-Short US & Canadian Equity

Member since: 2011

Daniel Dorenbush [email protected] | +1 416 687 6598 Toronto, ON

www.waratahadvisors.com

West Face capital inc. Opportunistic

Member since: 2011

alana Johnston [email protected] | +1 647 288 0344 Toronto, ON

www.westfacecapital.com

sW8 asset management, inc. Multi-Strategy, North American Equity Long-Short focus

Member since: 2011

Danielle skipp [email protected] | +1 647 340 6272 Toronto, ON

www.sw8.ca

96 |

MEMBER DIRECTORYHEDGE FUND AND FoHF MANAGERS

OTHER ASSET MANAGERS

Westcourt capital corporation Income and Real Estate-linked Securities

Member since: 2011

David kaufman [email protected] | +1 416 671 1941 Toronto, ON

www.westcourtcapital.com

blackrock asset management canada limited Asset Manager – ETFs Member since: 2011

eric leveille [email protected] | +1 416 643 4050 Toronto, ON

www.blackrock.com

bullion marketing services inc. Precious Metals Fund Manager Member since: 2005

paul de sousa [email protected] | +1 905 415 2933 Toronto, ON

www.bmgbullion.com

Horizons eTFs Asset Manager – ETFs Member since: 2003

Jaime purvis [email protected] | +1 416 601 2495 Toronto, ON

www.horizonsetfs.com


member Directoryservice providers

98 |

bmo capital markets Prime Brokerage Services

Member since: 2002

katrina rempel [email protected] | +1 416 359 7524 Toronto, ON

www.bmo.com

cibc prime services Group Prime Brokerage Services

Member since: 2010

claude robillard [email protected] | +1 416 594 8534 Toronto, ON

www.cibc.com

Deutsche bank aG, canada branch Prime Brokerage Services

Member since: 2012

Jeff knupp [email protected] | +1 416 682 8000 Toronto, ON

www.db.com

rbc capital markets Prime Brokerage Services

Member since: 2003

andrew Thornhill [email protected] | +1 416 842 6440 Toronto, ON

www.rbccm.com

MEMBER DIRECTORYPRIME BROKERS

MEMBER DIRECTORY: SERVICE PROVIDERS


scotia capital prime Finance Prime Brokerage Services

Member since: 2005

kripa kapadia [email protected] | +1 416 863 7305 Toronto, ON

www.scotiaprimefinance.com

100 |

Deloitte & Touche canada Audit, Tax and Advisory Services

Member since: 2003

George kosmas [email protected] | +1 416 601 6084 Toronto, ON

www.deloitte.ca

ernst & Young llp Audit, Tax and Advisory Services

Member since: 2003

Joseph micallef [email protected] | +1 416 943 3494 Toronto, ON

www.ey.com/ca

kpmG llp Audit, Tax and Advisory Services

Member since: 2007

peter Hayes [email protected] | +1 416 777 3939 Toronto, ON

www.kpmg.ca

pricewaterhousecoopers llp Audit, Tax and Advisory Services

Member since: 2002

chris pitts [email protected] | +1 416 947 8964 Toronto, ON

www.pwc.com/ca/en

MEMBER DIRECTORYACCOUNTING FIRMS



Deloitte & Touche canada Audit, Tax and Advisory Services

Member since: 2003

George kosmas [email protected] | +1 416 601 6084 Toronto, ON

www.deloitte.ca

ernst & Young llp Audit, Tax and Advisory Services

Member since: 2003

Joseph micallef [email protected] | +1 416 943 3494 Toronto, ON

www.ey.com/ca

kpmG llp Audit, Tax and Advisory Services

Member since: 2007

peter Hayes [email protected] | +1 416 777 3939 Toronto, ON

www.kpmg.ca

pricewaterhousecoopers llp Audit, Tax and Advisory Services

Member since: 2002

chris pitts [email protected] | +1 416 947 8964 Toronto, ON

www.pwc.com/ca/en

aird & berlis llp Member since: 2003

Jennifer Wainwright [email protected] | +1 416 865 4632 Toronto, ON

www.airdberlis.com

borden ladner Gervais llp Member since: 2004

ron kosonic [email protected] | +1 416 367 6621 Toronto, ON

www.blg.com

Davies Ward phillips & Vineberg llp Member since: 2010

Tim baron [email protected] | +1 416 863 5539 Toronto, ON

www.dwpv.com

Heenan blaikie llp Member since: 2010

Tom cotter [email protected] | +1 403 261 3451 Calgary, AB

www.heenanblaikie.com

LAW FIRMS

102 |

mcmillan llp

Member since: 2002

michael burns [email protected] | +1 416 865 7261 Toronto, ON

www.mcmillan.ca

norton rose canada llp

Member since: 2011

michael bunn [email protected] | +1 416 216 4095 Toronto, ON

www.nortonrose.com

stikeman elliott llp

Member since: 2009

Darin renton [email protected] | +1 416 869 5635 Toronto, ON

www.stikeman.com

Torys llp

Member since: 2002

marlene Davidge [email protected] | +1 416 865 7322 Toronto, ON

www.torys.com

MEMBER DIRECTORYLAW FIRMS



cibc mellon Fund Administration

Member since: 2009

charbel cheaib [email protected] | +1 416 643 6352 Toronto, ON

www.cibcmellon.com

ciTco (canada) inc. Fund Administration

Member since: 2008

kieran conroy [email protected] | +1 416 966 9200 Toronto, ON

www.citco.com

citigroup Fund services ltd. Fund Administration

Member since: 2010

Donald king [email protected] | +1 905 212 8988 Toronto, ON

www.citi.com

commonWealth Fund services ltd. Fund Administration

Member since: 2008

mackenzie crawford [email protected] | +1 416 687 6654 Toronto, ON

www.commonwealthfundservices.com

FUND ADMINISTRATORS

104 |

Harmonic Fund services canada inc. Fund Administration

Member since: 2006

allen bernardo [email protected] | +1 416 507 4700 Toronto, ON

www.harmonic.ky

rbc Dexia investor services Fund Administration

Member since: 2006

brad Taylor [email protected] | +1 416 955 2022 Toronto, ON

www.rbcdexia.com

The investment administration solution inc. Fund Administration

Member since: 2003

David chan [email protected] | +1 416 368 9569 ext 288 Toronto, ON

www.TheSolutionPeople.com

ubs Fund services, canada Fund Administration

Member since: 2007

Heather budd [email protected] | +1 416 971 4702 Toronto, ON

www.ubs.com

MEMBER DIRECTORYFUND ADMINISTRATORS



canada pension plan investment board Plan Sponsor – Public Pension

Member since: 2012

marco Vetrone [email protected] | +1 416 874 5221 Toronto, ON

www.cppib.ca

ontario Teachers’ pension plan Institutional Investor

Member since: 2004

Jonathan Hausman [email protected] | +1 416 730 5388 Toronto, ON

www.otpp.com

INSTITUTIONAL INVESTORS

106 |

cidel Financial Group Private Wealth Management - Private Bank

Member since: 2003

matt maldoff [email protected] | +1 416 925 7585 Toronto, ON

www.cidel.com

montréal exchange Canadian Derivatives Exchange

Member since: 2003

brian Gelfand [email protected] | +1 514 871 7884 Montréal, QCwww.m-x.ca

MEMBER DIRECTORYOTHER


Certain institutional investor members are anonymous by request and this listing is current as of April 24, 2012. For an updated list of all public members, please go to http://aima-canada.org/aima_canada_member_directory.html

castle Hall alternatives inc. Due Diligence Consultant

Member since: 2011

chris addy [email protected] | +1 450 465 8880 Montréal, QC

www.castlehallalternatives.com

cibc Wood Gundy Retail Brokerage

Member since: 2004

Troy killick [email protected] | +1 416 956 3456 Toronto, ON

www.woodgundy.com

http://aima-canada.org/aima_canada_member_directory.html

cidel Financial Group Private Wealth Management - Private Bank

Member since: 2003

matt maldoff [email protected] | +1 416 925 7585 Toronto, ON

www.cidel.com

montréal exchange Canadian Derivatives Exchange

Member since: 2003

brian Gelfand [email protected] | +1 514 871 7884 Montréal, QCwww.m-x.ca

castle Hall alternatives inc. Due Diligence Consultant

Member since: 2011

chris addy [email protected] | +1 450 465 8880 Montréal, QC

www.castlehallalternatives.com

cibc Wood Gundy Retail Brokerage

Member since: 2004

Troy killick [email protected] | +1 416 956 3456 Toronto, ON

www.woodgundy.com

FOR MORE INFORMATION ON AIMA CANADA, PLEASE CONTACT:

James burron, caia Chief Operating Officer, AIMA Canada

Suite 504 – 80 Richmond Street WestToronto, OntarioM5H 2A4

[email protected] +1 416 453 0111

www.aima-canada.org

mailto:jburron%40aima-canada.org?subject=

http://www.aima-canada.org

http://eepurl.com/fgbcs