UBS Asset Management (Canada) Inc. and The Top Fund

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief to extend the timeline for pooled funds to file and delivery financial statements from 60 to 120 days for interim financial statements and 90 to 180 days for annual financial statements -- funds invest primarily in pooled funds domiciled outside of Canada that do not have comparable reporting deadlines -- additional time needed to incorporate financial statements of underlying funds into top funds.

Applicable Legislative Provisions

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

October 31, 2024

IN THE MATTER OF
THE SECURITIES LEGISLATION OF ONTARIO
(the Jurisdiction)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
UBS ASSET MANAGEMENT (CANADA) INC.
(the Filer)

AND

THE TOP FUND
(as defined herein)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of UBS (Canada) Global Real Estate Funds Selection Trust (the Top Fund) for a decision under the securities legislation of the Jurisdiction (the Legislation) exempting the Top Fund from:

(a) the requirement in section 2.2 of National Instrument 81-106 -- Investment Fund Continuous Disclosure (NI 81-106) that the Top Fund files its audited annual financial statements and auditor's report on or before the 90th day after the Top Fund's most recently completed financial year (the Annual Filing Deadline);

(b) the requirement in paragraph 5.1(2)(a) of NI 81-106 that the Top Fund delivers to securityholders its audited annual financial statements and auditor's report by the Annual Filing Deadline (the Annual Delivery Requirement);

(c) the requirement in section 2.4 of NI 81-106 that the Top Fund files its interim financial report on or before the 60th day after the Top Fund's most recently completed interim period (the Interim Filing Deadline); and

(d) the requirement in paragraph 5.1(2)(b) of NI 81-106 that the Top Fund delivers to securityholders its interim financial report by the Interim Filing Deadline (the Interim Delivery Requirement);

(collectively, the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada.

Definitions

Terms defined in National Instrument 14-101 -- Definitions, MI 11-102, National Instrument 81-102 -- Investment Funds and NI 81-106 have the same meaning if used in this decision unless otherwise defined.

UBS means the Filer and its affiliates.

UBS Master Fund means UBS (UK) Real Estate Funds Selection Global Ex Canada LP.

Representations

The decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a company formed and existing under the laws of the Province of Nova Scotia. The Filer's head office is located in Toronto, Ontario.

2. The Filer is registered as (i) an investment fund manager (IFM) in each of Ontario, Québec and Newfoundland and Labrador, (ii) a portfolio manager in each of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec and Saskatchewan, (iii) an exempt market dealer in each of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec, Saskatchewan and Yukon, (iv) as an adviser in Manitoba and (v) as a commodity trading manager in Ontario.

3. The Filer is the IFM of the Top Fund.

4. A third party acts as trustee of the Top Fund.

5. The Filer is not in default of securities legislation in any Jurisdiction.

The Top Fund

6. The Top Fund was formed by the Filer as a trust under the laws of the Province of Ontario.

7. Once the Exemption Sought is granted then the Top Fund will not be in default of securities legislation in any Jurisdiction.

8. The Top Fund is an investment fund for purposes of the securities legislation of the Jurisdiction.

9. The Top Fund is not a reporting issuer in any province or territory of Canada.

10. Securities of the Top Fund will only be offered for sale to qualified investors in all provinces and territories of Canada pursuant to applicable exemptions from the prospectus requirements under National Instrument 45-106 Prospectus Exemptions.

11. The Top Fund has a financial year-end of December 31.

12. The investment objective of the Top Fund is to invest substantially all of its assets in the UBS Master Fund, the investment objective of which is to assemble a broadly diversified, mostly core real estate portfolio so as to provide access to major property markets worldwide.

13. The UBS Master Fund is managed by UBS and invests a material portion of its assets in underlying funds (each, an Underlying Fund) which may be domiciled in various jurisdictions.

14. As at October 15, 2024, 100% of the Top Fund's investible assets were indirectly invested in Underlying Funds that were (i) managed by entities unrelated to the Filer and (ii) not domiciled in Canada.

15. UBS believes that the Top Fund's indirect investments in the Underlying Funds offers benefits not available through a direct investment in the companies, other issuers or assets held by the Underlying Funds.

16. Securities of the Top Fund will be typically redeemable at various intervals, as will securities of certain Underlying Funds, but securities of other Underlying Funds will not be redeemable until the termination of such Underlying Funds. As the Top Fund has a medium to long-term investment horizon, the Top Fund will be able to manage its own liquidity requirements taking into consideration the frequency at which securities of the Underlying Funds may be redeemed.

17. The net asset value of the Top Fund is calculated on a quarterly basis. Securityholders of the Top Fund will be provided with the net asset value of the Top Fund on a quarterly basis.

18. Certain holdings of the Top Fund invested in securities of the Underlying Funds may be disclosed in the Top Fund's annual financial statements and interim financial reports.

Financial Statement Filing and Delivery Requirements

19. Generally, section 2.2 and paragraph 5.1(2)(a) of NI 81-106 require the Top Fund to file and deliver its audited annual financial statements and auditor's report by the Annual Filing Deadline. As the Top Fund's financial year-end is December 31, the Top Fund has a filing and delivery deadline of March 31.

20. Generally, section 2.4 and paragraph 5.1(2)(b) of NI 81-106 require the Top Fund to file and deliver its interim financial reports by the Interim Filing Deadline. As the Top Fund's interim period-end is be June 30, the Top Fund will have an interim filing and delivery deadline of August 29.

21. Section 2.11 of NI 81-106 provides an exemption from the filing requirements of the audited annual financial statements and auditor's report, and interim financial reports under sections 2.2 and 2.4 respectively if, among other things, the Top Fund delivers such statements and reports in accordance with Part 5 of NI 81-106 by the Annual Filing Deadline and Interim Filing Deadline, as applicable.

22. The Top Fund needs to receive financial statements from the UBS Master Fund in order to finalize its financial statements and the UBS Master Fund needs to obtain financial statements from the Underlying Funds in which it is invested in order to finalize its financial statements.

23. The UBS Master Fund is required pursuant to applicable law in its jurisdiction of formation to publish audited annual financial statements within six months of its December 31 year-end.

24. The Underlying Funds may have varying financial year-ends and may be subject to a variety of financial reporting deadlines.

25. In most cases, the UBS Master Fund will not be able to obtain the audited annual financial statements and auditor's reports, and interim financial reports of the Underlying Funds sooner than the deadline for filing such statements and reports of the Underlying Funds and, in all cases, no sooner than other securityholders of the Underlying Funds receive the financial statements and reports of the Underlying Funds.

26. As a result, the Top Fund will not be able to meet each Annual Filing Deadline and Annual Delivery Requirement and each Interim Filing Deadline and Interim Delivery Requirement. The Filer expects this timing delay in the completion of its audited annual financial statements and unaudited interim financial reports of the Top Fund to occur every year for the foreseeable future.

27. The 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 year-end, to enable (i) the UBS Master Fund to first receive the audited annual financial statements and auditor's reports of the relevant Underlying Funds so as to be able to prepare the UBS Master Fund's audited annual financial statements and auditor's report and (ii) the Top Fund to first receive the audited annual financial statements and auditor's reports of the UBS Master Fund so as to be able to prepare the Top Fund's audited annual financial statements and auditor's report.

28. The Top Fund therefore 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 (i) the UBS Master Fund to first receive the interim financial reports of the relevant Underlying Funds so as to be able to determine the net asset value of the UBS Master Fund and prepare the UBS Master Fund's interim financial reports and (ii) the Top Fund to first receive the interim financial reports of the UBS Master Fund so as to be able to determine the net asset value of the Top Fund and prepare the Top Fund's interim financial reports.

29. Based on historical financial statement delivery dates of the UBS Master Fund and the Underlying Funds, the Filer does not believe the Top Fund will be able to comply with a shorter extension period than what is being requested.

30. Investors in the Top Fund (which does not have an offering memorandum) will be notified, that: (i) audited annual financial statements and auditor's reports for the Top Fund will be delivered to each investor within 180 days of the Top Fund's financial year end; and (ii) unaudited interim financial reports for the Top Fund will be delivered to each investor within 120 days following the end of each interim period of the Top Fund.

31. The Filer will notify securityholders of the Top Fund that it has received and intends to rely on relief from the Annual Filing Deadline and Annual Delivery Requirement and the Interim Filing Deadline and the Interim Delivery Requirement under the Exemption Sought.

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 Exemption Sought is granted provided that:

(a) The Top Fund has a financial year end of December 31.

(b) The Top Fund's investment strategy is to indirectly invest its investable assets in Underlying Funds which are consistent with the Top Fund's investment objective.

(c) The Top Fund indirectly invests the majority of its assets in Underlying Funds.

(d) No less than 25% of the total assets of the Top Fund as at its financial year end of December 31 are invested in Underlying Fund(s) that have financial year ends corresponding to such Top Fund and are subject to laws of their jurisdictions or have constating documents or contractual obligations that require or permit their annual financial statements to be delivered within 180 days of their financial year ends and interim financial statements to be delivered within 120 days of their most recent interim period.

(e) Investors in the Top Fund (which does not have an offering memorandum) will be notified, that: (i) audited annual financial statements and auditor's reports for the Top Fund will be delivered to each investor within 180 days of the Top Fund's financial year end; and (ii) unaudited interim financial reports for the Top Fund will be delivered to each investor within 120 days following the end of each interim period of the Top Fund.

(f) The Top Fund notifies its securityholders that the Top Fund has received and intends to rely on relief from the filing and delivery requirements under section 2.2, section 2.4, paragraph 5.1(2)(a) and paragraph 5.1(2)(b) of NI 81-106 including any material terms and conditions of the Exemption Sought.

(g) The Top Fund is not a reporting issuer and the Filer has the necessary registrations to carry out its operations in each Jurisdiction in which it operates.

(h) The conditions in section 2.11 of NI 81-106 will be met, except for subsection 2.11(b), and:

(i) the audited annual financial statements and auditor's report will be delivered to securityholders of the Top Fund 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

(ii) the interim financial reports will be delivered to securityholders of the Top Fund in accordance with Part 5 of NI 81-106 on or before the 120th day after the Top Fund's most recently completed interim period.

(i) This order 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 Requirement applies in connection with investment funds that are not reporting issuers.

"Darren McKall"
Manager, Investment Management Division
Ontario Securities Commission

Application File #: 2024/0276
SEDAR+ File #: 6125642