CANADA Law and Practice Contributed by: Darin Renton, Jill Winton, Amy Chao and Irena Ninkovic, Stikeman Elliott LLP
There are no residency requirements for employees of registered IFMs, but there are proficiency and registra - tion requirements for the chief compliance officer and individuals performing registrable activities under the IFM’s registration. 3.9 Change of Control A registered IFM is required to give the securities regu - lators written notice at least 30 days in advance where it proposes to acquire: • for the first time, direct or indirect ownership, ben - eficial or otherwise, of 10% or more of the voting securities or other securities convertible into voting securities of a firm registered in Canada or any foreign jurisdiction, or its parent company; or • all or a substantial part of the assets of a firm regis - tered in Canada or any foreign jurisdiction. A registered IFM must also give written notice to the regulators as soon as it knows or has reason to believe that another person or company – alone or in combi - nation with any other person or company – is about to acquire or has acquired for the first time direct or indirect ownership, beneficial or otherwise, of 10% or more of the voting securities or other securities con - vertible into voting securities of the IFM or a person or company of which it is a subsidiary. This notice must be delivered to the IFM’s principal regulator as soon as possible. In both cases described above, the securities regu - lators may object to the acquisition of securities or assets of or by a registered firm if they determine that the acquisition is: • likely to give rise to a conflict of interest; • likely to hinder the registered firm in complying with securities laws; • inconsistent with an adequate level of investor protection; or • otherwise prejudicial to the public interest. Registered IFMs of a public investment fund are also required to notify investors in the fund and securities regulators of any direct or indirect change of control of the IFM.
For registered IFMs that are also registered as invest - ment dealers with the Canadian Investment Regula - tory Organization (CIRO), there are also notification and/or approval requirements under CIRO Rules. 3.10 AI and Use of Data There are currently no regulatory requirements or limitations in connection with the use of artificial intelligence, predictive data or big data, either for investment purposes or for operational/compliance purposes. 3.11 Anticipated Changes for Fund Managers There are currently no forthcoming changes that may impact any of the information given in this section. 4. Investors 4.1 Types of Investors in Alternative Funds Alternative funds are typically distributed on a private placement basis to two categories of investors: • “accredited investors”, as such term is defined in NI 45-106; and • “permitted clients”, as such term is defined in NI 31-103. The “accredited investor” category includes institu - tional investors such as banks, trust companies, pen - sion funds, municipalities, certain investment funds, entities (other than investment funds) that have net assets of at least CAD5 million (as shown on their most recent financial statements) and individuals who have: • net income before taxes of more than CAD200,000 in each of the two most recent calendar years and whose net income is expected to be more than CAD200,000 in the current calendar year; • net income before taxes combined with a spouse of more than CAD300,000 in each of the two most recent calendar years and whose combined net income is expected to be more than CAD300,000 in the current calendar year; • financial assets, alone or with a spouse, of more than CAD1 million before taxes but net of related liabilities; or
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