Mutual fund in Ontario (non-reporting issuer) granted extension of the annual financial statement filing deadline as wholly invested in offshore investment fund subject to different reporting requirements.
National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 2.2, 5.1(2).
IN THE MATTER OF
NATIONAL INSTRUMENT 81-106
INVESTMENT FUND CONTINUOUS DISCLOSURE
IN THE MATTER OF
ABRIA ALTERNATIVE INVESTMENTS INC.
IN THE MATTER OF
ABRIA DIVERSIFIED ARBITRAGE TRUST
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 sections 2.2 and 18.3 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 Annual 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 Annual Delivery Requirement) (the Requested Relief).
This Order is based on the following facts represented by the Applicant:
1. The Applicant is a corporation incorporated under the laws of Ontario.
2. The Applicant is registered as an investment counsel and portfolio manager and as a limited market dealer under the Securities Act (Ontario) (the Act).
3. 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 and is offered to investors pursuant to exemptions from the prospectus requirement under the Securities Act (Ontario). The Fund has a year-end of June 30.
4. The Fund's investment objectives are to preserve capital, and to provide investors with stable, tax efficient, low risk returns. The Fund seeks to achieve its investment objectives by investing in Canadian common shares and obtaining indirect exposure to the returns of Abria Diversified Arbitrage Fund Ltd. (ADAF). ADAF is organized as an exempted company under the laws of the Cayman Islands.
5. ADAF primarily invests its assets in the Arbitrage Master Segregated Portfolio (the Master Fund) of Abria International SPC Limited, an exempted segregated portfolio company under the laws of the Cayman Islands. The Master Fund primarily invests its assets in a portfolio of underlying independently managed hedge funds (the Underlying Funds).
6. The financial year-end of each of ADAF and the Master Fund is June 30. The filing deadline for the financial statements of ADAF and the Master Fund under the laws of the Cayman Islands will be December 31 of each year. The Applicant expects that the audited financial statements of ADAF and the Master Fund may not be available until mid-December of each year.
7. The Underlying Funds have varying financial year-ends and are subject to a variety of financial reporting deadlines. The audits of ADAF and the Master Fund are not complete because the financial statements of certain of the Underlying Funds are not available and the auditors of the Fund has advised that those audited financial statements are required in order to sign off on the audits of the Fund.
8. The Applicant can never be guaranteed that it will receive the audited financial statements of ADAF and the Master Fund in order that it can meet the Annual Filing Deadline and Annual Delivery Requirement for the Fund's audited financial statements in any year. Based on discussions with the auditors and others, the Applicant believes this will be a recurring problem each financial year.
9. Sections 2.2 and 18.3 together with subsection 5.1(2) of NI 81-106 require the Fund to file and deliver its 2007 audited annual financial statements by September 28, 2007.
10. The Fund will not be able to meet the Annual Filing Deadline and will not be able to comply with the Annual Delivery Requirement.
11. The Fund is in the process of a windup. The Fund has suspended redemptions and is not accepting new investors or making any new investments.
12. The Fund will notify its securityholders that it has received and intends to rely on relief from the Annual Filing Deadline and the Annual Delivery Requirement.
The Director is satisfied that it would not be prejudicial to the public interest to grant the Requested Relief and orders that the Fund is exempt from the requirement to file its annual audited financial statements by the Annual Filing Deadline and from the Annual Delivery Requirement, provided that the audited annual financial statements are filed and delivered by December 31 of the year following the financial year for which audited annual financial statements are prepared.
Nothing in this Order precludes the Fund from relying on the exemption contained in section 2.11 of NI 81-106 provided the Fund's audited annual financial statements are delivered to unitholders within the time period specified above.
September 27, 2007