Mutual fund in Ontario (non-reporting issuer) granted an extension of the annual financial statement filing deadline as fund provides exposure to offshore investment fund for which audited financial information not yet available.
National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 2.2, 5.1(2), 17.1.
Securities Act, R.S.O. 1990, c. S.5, as am.
February 27, 2007
IN THE MATTER OF
NATIONAL INSTRUMENT 81-106
INVESTMENT FUND CONTINUOUS DISCLOSURE
IN THE MATTER OF
CIBC ASSET MANAGEMENT INC.
IN THE MATTER OF
CIBC MARKET NEUTRAL FUND
The Ontario Securities Commission received an application from the Applicant, on behalf of the Fund, for a decision pursuant to section 17.1 of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) exempting the Fund from:
(a) the requirement in section 2.2 of NI 81-106 that the Fund file its audited annual financial statements on or before the 90th day after its most recently completed financial year (the Filing Deadline); and
(b) the requirement in subsection 5.1(2) of NI 81-106 that the Fund deliver its audited annual financial statements to securityholders by the Filing Deadline (the Delivery Requirement).
This Exemption is based on the following facts represented by the Applicant:
1. The Applicant is incorporated under the laws of Canada and has its head office in Toronto. The Applicant is registered as an investment counsel and portfolio manager, commodity trading manager, and mutual fund dealer under the Securities Act (Ontario).
2. The Applicant is the trustee and manager of the Fund. The Fund is an open-ended mutual fund trust established under the laws of Ontario. The Fund is not a reporting issuer. The year-end of the Fund is December 31.
3. The Fund's investment objective is to generate consistent returns over the medium term with little correlation to major global stock and fixed income market indices. The Fund seeks to achieve its investment objective by providing exposure to one or more underlying funds that invest in hedge funds that primarily pursue market neutral implementations of hedge fund strategies.
4. The current underlying fund selected by the Fund is Gottex Market Neutral Fund (GMNF), which is a portfolio of Gottex Value Added Fund Limited (GVAFL). GVAFL was incorporated under the laws of the British Virgin Islands as an open-ended investment company with limited liability. The financial year-end of GVAFL is December 31.
5. GMNF invests across over fifty hedge funds (the Hedge Funds) in a globally diversified manner. The Hedge Funds have varying financial year-ends and are subject to a variety of financial reporting deadlines.
6. GVAFL's audited financial statements will not be available until mid-June of each year. The auditors of the Fund have advised CAMI and the Fund that in order to sign off on the audit of the Fund, the auditors either (a) require the audited financial statements of GVAFL, or (b) must conduct an audit of GVAFL, which would be extremely expensive for the Fund and would require the consent and participation of GVAFL and the Hedge Funds.
7. Since option (b) in paragraph 6 would be extremely expensive for the Fund and would likely not even be possible because of the third party cooperation necessary, the Applicant and the Fund believe that the only appropriate solution is to audit of the Fund once it is in receipt of GVAFL's audited financial statements. The audit of the Fund will therefore not be complete until July 31 of each year.
The Director is satisfied that it would not be prejudicial to the public interest to grant the requested relief and exempts the Fund from the requirement to file its annual audited financial statements for the year ended December 31, 2006 by the Filing Deadline and from the Delivery Requirement, provided that the annual audited financial statements for the year ended December 31, 2006 are filed by July 31, 2007.
Nothing in this Exemption precludes the Fund from relying on the exemption contained in section 2.11 of NI 81-106 provided the audited annual financial statements for the year ended December 31, 2006 of the Fund are delivered by July 31, 2007.