
Publication
Essential Corporate News – Week ending 11 July 2025
On 1 July 2025, the Quoted Companies Alliance (QCA) published three new board committee guides to accompany the QCA Environmental and Social Guide published in December 2024.
Author:
Global | Publication | September 2016
The Ontario Securities Commission (OSC) has released the September 2016 edition of the Investment Funds Practitioner (the Practitioner), which provides an overview of recent issues arising from applications for exemptive relief, prospectuses and continuous disclosure documents filed by investment funds. This legal update summarizes a select number of key issues contained in the Practitioner.
Currency-hedged series
Pursuant to National Instrument 81-102 - Investment Funds, each class or series of a fund that is referable to a separate portfolio of assets is considered to be a separate fund. Despite the fact that gains and losses associated with the derivatives used to deliver currency hedging for a hedged series are referable only to the hedged series and not to all series of a fund, hedged series of a fund have historically not been treated as a separate fund by the OSC.
However, the OSC has recently seen instances of all or substantially all of the foreign currency exposure associated with a fund’s portfolio not being hedged by a hedged series (for example, a hedged series employing discretionary currency hedging where a manager hedges anywhere from 0% to 100% of the hedged series’ foreign currency exposure or different hedged series within a fund having differing levels of discretionary currency hedging). Where all or substantially all of the foreign currency exposure associated with a fund’s portfolio is not being hedged by a hedged series then the OSC may question a manager as to whether it is appropriate to consider the hedged series to be a separate fund.
In addition, the OSC has advised that it will begin requesting, as part of its prospectus reviews, that a fund with a hedged series include in its prospectus disclosure that prior approval of securityholders of the hedged series will be obtained before the currency hedging strategy of the hedged series is changed.
Fund-of-funds disclosure of fees and expenses
The OSC has advised that managers should “look-through” the expenses in fund-of-funds when calculating the management expense ratio (MER) and the trading expense ratio for top funds, including top funds that invest in mutual funds and ETFs that are managed by third parties. With respect to expenses of underlying funds managed by third parties, the OSC expects managers to use reasonable estimates.
When providing disclosure in a prospectus for a fund-of-funds the OSC expects top funds to provide adequate information so that investors are made aware of the impact that the expected management fees of underlying funds will have on the MER of the top fund. For example, it is inappropriate to only disclose a minimal management fee for a top fund where the underlying funds in which it will invest have higher management fees, particularly for a new top fund that does not have a historical MER. Instead, prospectus disclosure outlining the fact that the underlying funds may have higher management fees should also be included.
IRC reporting under Section 4.5 of NI 81-107
Pursuant to section 4.5 of National Instrument 81-107 - Independent Review Committee for Investment Funds an Independent Review Committee (IRC) must provide notice to a fund’s principal regulator when the IRC becomes aware of any instance in which the manager of the fund acted in certain conflict of interest matters but did not comply with a condition imposed by securities legislation or any IRC approval.
The OSC has advised that a materiality threshold should not be applied to the IRC’s reporting obligations – any instance involving a breach that an IRC becomes aware of (even a breach that the manager and the IRC do not believe is material) must be reported to the fund’s principal regulator. The Practitioner outlines the OSC’s expectations regarding the content of a letter reporting a breach.
Publication
On 1 July 2025, the Quoted Companies Alliance (QCA) published three new board committee guides to accompany the QCA Environmental and Social Guide published in December 2024.
Publication
In the two years since our last climate litigation update, the prevalence and variety of global climate litigation around the world has continued to increase.
Publication
Selon un rapport conjoint du Bureau du surintendant des institutions financières (BSIF) et de l’Agence de la consommation en matière financière du Canada (ACFC), environ 70 % des institutions financières fédérales prévoient utiliser l’IA d’ici 2026 .
Subscribe and stay up to date with the latest legal news, information and events . . .
© Norton Rose Fulbright LLP 2025