Asset Management and Investments Funds lawyers are generally understood to include a broad range of legal services to public mutual funds, private investment funds, labour-sponsored venture capital funds, special-purpose investment vehicles structured as mutual funds for tax or regulatory reasons, Canadian and international investment advisers and to mutual fund and other securities dealers.
These legal services include establishment of new funds and advising as to regulatory compliance, disclosure, distribution, dealer compensation and management fees; offerings of fund securities by prospectus or private placement; fund mergers and conversions; taxation; adviser and dealer registrations; custodial arrangements; sales communications; use of derivatives by funds; conflicts of interests and fiduciary duties of trustees, managers, advisers and general governance issues; mutual fund limited partnerships; and advising as to access to US and offshore markets for Canadian funds and access of US and offshore funds to Canadian markets.
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An investment fund lawyer, who may also be referred to as an asset management lawyer, ensures that both foreign investors and Canadian recipients of investments comply with the below-mentioned laws and regulations, since laws on investments may also refer with other laws such as banking, taxation, and insurance laws.
In representing investor-clients, an investment fund lawyer may either represent the private or the public sector, since additional laws may apply depending on the sector concerned. When mergers or acquisitions do occur, stricter compliance are thus needed as mentioned above, hence an investment fund lawyer may also assist clients through the process vis-a-vis Canadian laws on mergers. Advises on regulatory compliance and disclosure obligations, based on the fiduciary nature of these transactions, are what an investment fund lawyer does best for their clients.
Investment funds in Canada – whether invested by a Canadian or a foreign individual/corporation – are protected by federal laws and regulations, regulatory entities, in addition to the applicable provincial and territorial statutes. Thus, it is highly encouraged to consult with an investment fund lawyer as experts on these laws and regulations when investing in Canada or receiving investments from foreign entities.
The main regulating organisation is the Investment Industry Regulatory Organization of Canada (IIROC), which is also recognised by the Canadian Securities Administrators (CSA). The IIROC creates regulations with regards to investments in Canada. As such, investment fund lawyers or asset management lawyers may be referred to in ensuring compliance with IIROC rules and regulations.
Know more about what is asset management, what do asset management lawyers do, and the some of the governing laws of Canada on asset management.
The Investment Canada Act is the federal law on investments made by non-Canadians in Canada. The Act’s purpose is to encourage investment and economic growth and opportunity by reviewing significant investments of non-Canadians and those that could pose a threat to the national security of Canada (Section 2).
Multiple federal departments oversee the enforcement of the Act, as mentioned in the Investment Canada Regulations. All investments set by Schedule IV of the said Regulations is under the responsibility of the Innovation, Science and Economic Development Canada; while foreign investments related to cultural industries is under the responsibility of Department of Canadian Heritage.
The Act applies to non-Canadians who may invest, and in turn acquires a direct or indirect interest over a Canadian company or corporation, or those who wants to establish a new business in Canada. Therefore, they must submit a Notification or an Application for Review, whichever is applicable, to the Minister of Industry. Under Part IV of the Act, a review on the investment is required when (1) the enterprise value of the Canadian business exceeds the prescribed monetary thresholds, or (2) it is injurious to national security. All other investments are only required to submit a notification.
As for those which needs governmental review or approval, there are two kinds of thresholds:
While a direct investment is generally reviewable, an indirect investment will only become reviewable when what is being acquired is a cultural business and will be reviewed by the Department of Canadian Heritage; or when it is poses a threat to the national security, thus, will be reviewed upon the recommendation of the Minister of Innovation, Science, and Economic Development.
*Actual amounts of review thresholds are annually computed, as officially published in the Canada Gazette.
Acquisition of control of Canadian businesses by non-Canadians will be reviewed under the Act if the non-Canadian acquires:
When foreign investors run into problems with regards to their investments in Canada, an investment fund lawyer or an asset management lawyer can assist them with the help of various legislations, one of which is the Canadian Investor Protection Fund (CIPF). The CIPF is an insurance program that provides protection to investors when an IIROC-regulated individual investment firm has become insolvent or has declared itself bankrupt. It was established by the securities commissions of each respective province and territory, and membership under CIPF of IIROC-regulated firms is mandatory.
For an investor-client of an insolvent or bankrupt firm be qualified under the insurance protection of CIPF, the investor-client's account must be disclosed in the records of the firm, which is solely for the purpose of either holding or trading in securities or commodity and futures contracts. The investor-client is also not required to be a resident or citizen of Canada. However, an exception is when the said account is a mutual fund dealer account held by a firm whose office is in Québec.
When an investor-client is thus qualified, the CIPF proceeds in ensuring that any property or investment made before the said insolvent firm that is being held by it is returned to the investor-client. In some instances, the CIPF may also request the appropriate court or regulating authority to appoint a trustee for the insolvent firm. But not all types of investment or properties are secured by the CIPF. Accordingly, it only covers “missing properties” which may be in a form of cash, security, futures contract, or segregated insurance fund. As such, crypto assets are not included as a missing property that may be recovered.
There are also coverage limits to these insured investments or properties, as CIPF will only cover the value of the missing property at the date of the firm’s insolvency, up to the limits prescribed in the CIPF Coverage Policy.
Interested in investing in Canada, or have concerns regarding your current investments? Scroll down to consult with the best investment fund or asset management lawyers as ranked by Lexpert.