Trans-Canada Capital Inc. and The Top Funds

Headnote

National Instrument 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Mutual funds that are not reporting issuers granted 90-day extension of the annual financial statement filing and delivery deadlines and 60-day extension of the interim financial statement filing and delivery deadlines under NI 81-106 -- Funds invest the majority of their assets in Underlying Funds with later financial reporting deadlines.

Statutes Cited

National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 2.2, 2.4, 5.1(2) and 17.1.

August 25, 2022

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the "Jurisdiction") AND IN THE MATTER OF TRANS-CANADA CAPITAL INC. (the "Filer") AND THE TOP FUNDS (as defined below)

ORDER

Background

The principal regulator in the Jurisdiction has received an application from the Filer, as investment fund manager of TCC Master Alternative Fund, LP, TCC Alternative Feeder 2, LP, TCC Alternative Fund Trust -- Non-Taxable, TCC Alternative Fund Trust -- Taxable, (the "Initial Top Funds") and any other existing or future mutual fund that is not and will not be a reporting issuer, that is or will be organized under the laws of the Jurisdiction, and that is, or will be, managed by the Filer and invests or will invest in underlying funds ("Underlying Funds") as part of its investment strategy (the "Future Top Master and Feeder Funds" and together with the Initial Top Funds, the "Top Funds") for a decision under the securities legislation of the Jurisdiction (the "Legislation") in respect of the fund-on-fund structure (described below) exempting the Top Funds from the following requirements of National Instrument 81-106 Investment Fund Continuous Disclosure ("NI 81-106"):

1. the requirement in section 2.2 that the Top Funds file their audited annual financial statements and auditor's report (the "Annual Financial Statements") on or before the 90th day after the Top Funds' most recently completed financial year ("Annual Filing Deadline");

2. the requirement in section 2.4 that the Top Funds file their interim financial statements (the "Interim Financial Statements" and collectively with the Annual Financial Statements, the "Financial Statements") on or before the 60th day after the Top Funds' most recently completed interim period ("Interim Filing Deadline");

3. the requirement in paragraph 5.1(2)(a) that the Top Funds deliver to the securityholders their Annual Financial Statements by the Annual Filing Deadline (the "Annual Delivery Requirement"); and

4. the requirement in paragraph 5.1(2)(b) that the Top Funds deliver to the securityholders their Interim Financial Statements by the Interim Filing Deadline (the "Interim Delivery Requirement");

(collectively, the "Requested Relief").

Representations

The Filer

1. The Filer is a corporation incorporated under the Canada Business Corporations Act ("CBCA") with its principal place of business in Montreal, Quebec.

2. The Filer is registered as an Exempt Market Dealer in all Canadian provinces and territories, and as a Portfolio Manager, Investment Fund Manager and Derivatives Portfolio Manager/Commodity Trading Manager in Ontario and Quebec.

3. The Filer is not a reporting issuer in any jurisdiction and is not in default of securities legislation of any jurisdiction of Canada.

4. The Filer is the investment fund manager of the Initial Top Funds, and is, or will be, the investment fund manager of each of the Top Funds.

The Top Funds

5. TCC Master Alternative Fund, LP was initially an exempted limited partnership formed under the laws of Cayman Islands and registered on May 31, 2019 for an unlimited term. It was continued under the laws of the province of Ontario as of July 18, 2022.

6. TCC Alternative Feeder 2, LP is a limited partnership formed under the laws of the province of Ontario and registered on June 30, 2022.

7. TCC Alternative Fund Trust -- Non-Taxable and TCC Alternative Fund Trust -- Taxable are trust funds formed under the laws of the province of Ontario, both effective January 1, 2022.

8. Each Future Top Master and Feeder Fund will be organized as a limited partnership under the laws of Ontario.

9. The Top Funds have and will continue to have their principal place of business in Montreal, Quebec. The Top Funds are not and will not be reporting issuers in any jurisdiction and the Initial Top Funds are not in default of securities legislation of any jurisdiction of Canada.

10. Each Top Fund is, or will be, a "mutual fund" for the purposes of the Legislation.

11. Securities of the Top Funds are and will be offered for sale and distribution on a continuous basis to qualified investors in all Canadian provinces and territories pursuant to an exemption from the prospectus requirements under National Instrument 45-106 Prospectus and Registration Exemptions.

12. Each Top Fund has, or will have, a financial year-end of December 31.

13. The Top Funds invest, or will invest, in units of Underlying Funds as part of their investment strategies.

14. The investment strategy of each Initial Top Fund is, or will be, to primarily invest the Initial Top Fund's assets in Underlying Funds that are private investment entities managed by independent managers with the minority balance invested in a diversified array of liquid alternative strategies and alternative asset classes. The Initial Top Funds seek to provide superior risk-adjusted returns though a diversified portfolio of private and/or public markets investments and a diversified array of liquid alternative strategies and alternative asset classes and by achieving broader diversification to alleviate or reduce a number of the burdens associated with these types of investments. The Filer seeks to achieve this strategy by employing a "multi-manager" approach and investing in several Underlying Funds managed by Underlying Fund managers who employ a variety of private and/or public markets fund investment strategies. The performance objective of the Initial Top Funds is to generate an annualized return of 10-12% across a full market cycle, through the construction of a diversified portfolio which includes real estate, private equity, private debt, infrastructure, co-investments and liquid strategies.

15. It is anticipated that the investment strategy of the Future Top Master and Feeder Funds will be to primarily invest their assets in Underlying Funds that are private investment entities managed by independent managers.

16. The Filer believes that investing in the Underlying Funds offers benefits not available through a direct investment in the companies, other issuers or assets held by the Underlying Fund.

17. The Filer engages in an extensive due diligence process when selecting Underlying Funds for each Top Fund.

18. Securities of the Underlying Funds are typically redeemable at various intervals, but in some cases may not be redeemable until the termination of the Underlying Funds. As each Top Fund has a long-term investment horizon, each Top Fund is able to manage its own liquidity requirements taking into consideration the frequency at which the securities of the Underlying Funds may be redeemed.

19. The net asset value of each Top Fund ("NAV") is calculated on a monthly or quarterly basis, as of the last business day of each month or quarter, as applicable (the "Valuation Date"). Investors of each Top Fund are provided with the NAV on a monthly or quarterly basis within 45 days (where the NAV is provided monthly) or 90 days (where the NAV is provided quarterly) of each Valuation Date.

20. The holdings of each Top Fund in securities of the Underlying Funds will be disclosed in the Financial Statements.

Financial Statements

21. Section 2.2 and subsection 5.1(2)(a) of NI 81-106 require the Top Funds to file and deliver their Annual Financial Statements to the securityholders by the Annual Filing Deadline. As the financial year-end for the Top Funds is December 31, they have a filing and delivery deadline of March 31.

22. Section 2.4 and subsection 5.1(2)(b) of NI 81-106 require the Top Funds to file and deliver their Interim Financial Statements to the securityholders by the Interim Filing Deadline. As the financial year-end for the Top Funds is December 31, they have an interim filing and delivery deadline of August 29.

23. Section 2.11 of NI 81-106 provides an exemption (the "Filing Exemption") from the obligation to file the Annual Financial Statements within the Annual Filing Deadline and the Interim Financial Statements within the Interim Filing Deadline if, among other things, an investment fund delivers its Annual Financial Statements and Interim Financial Statements in accordance with part 5 of NI 81-106.

24. The Top Funds require financial statements (audited in the case of the annual financial statements) of the respective Underlying Funds in order to finalize the information contained in the Top Funds' Financial Statements. The Filer will be unable to complete the Financial Statements and to submit them to the auditor in the case of the Annual Financial Statements or to determine the NAV in the case of the Interim Financial Statements, until the financial statements of the Underlying Funds are completed and available to the Top Funds.

25. The Underlying Funds may have varying financial year-ends and may be subject to a variety of financial reporting deadlines. Therefore, in most cases, the Top Funds will not be able to obtain the financial statements of the Underlying Funds sooner than the deadline for filing the Financial Statements and, in all cases, no sooner than other unitholders of the Underlying Funds receive the financial statements of the Underlying Funds.

26. The offering memorandum of each Top Fund that will be provided to investors will disclose that: (i) annual audited financial statements for the Top Fund will be delivered within 180 days of the Top Fund's financial year-end, and (ii) unaudited interim financial statements for the Top Fund will be delivered within 120 days following the end of each interim period of the Top Fund.

27. The Top Funds will notify their securityholders that they have received and intend to rely on the Requested Relief.

28. The Top Funds do not anticipate they will be able to meet the conditions of the Filing Exemption given that they do not expect to be able to deliver their Annual Financial Statements by the Annual Filing Deadline and their Interim Financial Statements by the Interim Filing Deadline. The Top Funds expect this timing delay in the completion of their Financial Statements to occur every year for the foreseeable future.

29. Each Top Fund therefore seeks an extension of the Annual Filing Deadline and Annual Delivery Requirement to permit delivery within 180 days of the Top Fund's most recently completed financial year, to enable the Top Fund's auditors to first receive the audited financial statements of the Underlying Funds so as to be able to prepare the Top Fund's Annual Financial Statements.

30. Each Top Fund also seeks an extension of the Interim Filing Deadline and Interim Delivery Requirement to permit delivery within 120 days of the Top Fund's most recently completed interim period, to enable the Top Fund to first receive the financial statements of the Underlying Funds so as to be able to determine the NAV and prepare the Top Fund's Interim Financial Statements.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Requested Relief is granted to a Top Fund for so long as:

1. The Top Fund has a financial year ending December 31;

2. The Top Fund's investment strategy is to primarily invest its assets in private investment entities managed by independent managers;

3. The Top Fund invests the majority of its assets in Underlying Funds;

4. No less than 25% of the total assets of the Top Fund at the time the Top Fund makes an initial investment decision in an Underlying Fund, are invested in investment entities that have financial reporting periods that end on December 31 of each year and are subject to laws of their jurisdictions that require annual financial statements to be delivered within 120 days of their financial year ends and interim financial statements to be delivered between 60 and 90 days of their most recent interim period.

5. The offering memorandum provided to securityholders regarding the Top Fund discloses that:

a. the Annual Financial Statements of the Top Fund will be filed and delivered on or before the 180th day after the Fund's most recently completed financial year; and

b. the Interim Financial Statements of the Fund will be filed and delivered on or before the 120th day after the Fund's most recently completed interim period.

6. The Top Fund notifies its securityholders that it has received and intends to rely on relief from the filing and delivery requirements under section 2.2, 2.4 and subsections 5.1(2)(a) and 5.1(2)(b) of NI 81-106.

7. The Top Fund is not a reporting issuer and the Filer has the necessary registrations to carry out its operations in each jurisdiction of Canada in which it operates.

8. The conditions in section 2.11 of NI 81-106 are met, except for subsection 2.11(b), and:

a. the Annual Financial Statements are delivered to securityholders in accordance with Part 5 of NI 81-106 on or before the 180th day after the Top Fund's most recently completed financial year; and

b. the Interim Financial Statements are delivered to securityholders on or before 120 days after the Top Fund's most recently completed interim period.

9. The Requested Relief terminates within one year of the coming into force of any amendment to NI 81-106 or other rule that modifies how the Annual Filing Deadline, Annual Delivery Requirement, Interim Filing Deadline, or Interim Delivery Deadline Requirement applies in connection with mutual funds under the Legislation.