Current structure
The Umbrella Fund is an open-end fund with Subfunds, all of them governed by Fund Contracts under the laws of a common law jurisdiction. The Subtrusts focus on (i) bonds denominated in specified currencies, (ii) foreign currency inflation-linked bonds or (iii) domestic and foreign equities and real estate securities. The Management Company and Custodian both are non-resident.
Pursuant to the Fund Contract (to which the Management Company and the Custodian Bank also are parties), on subscribing, the Unitholders acquire, own and share in the property of a Subfund as co-owners, evidenced in the form of fund Units. As such, the Unitholders are entitled to an undivided interest as tenants in common in the assets held therein and are entitled to all income and gains derived from same as such income or gains arise in accordance with the Units they acquire. Each Unit (which is non-voting) represents a claim against the Management Company conferring entitlement to the assets and income of a Subfund. A Unit is specified to not "confer any interest or share in any particular part of the assets of the [funds]." The fund and Subfunds do not have separate legal personality. The liabilities of a Unitholder are limited to the Unit subscription amount.
The sole Unitholder of the relevant Subfunds is the Pension Fund, a tax exempt entity that meets the requirements for exemption from Part XIII on dividends paid by corporations resident in Canada tax under the applicable Tax Treaty.
Pursuant to the Fund Contract, the Management Company, among other things, manages the Subfunds at its own discretion and in its own name, but for the account of the Unitholders.
Pursuant to the Canadian Agreement, the Custodian Bank has appointed the Canadian Sub-custodian as custodian of Canadian securities received by the Canadian Sub-custodian from or on behalf of the Custodian Bank.
Proposed transactions
The arrangement will invest in publicly traded shares of Canadian public corporations as well as in shares of private Canadian corporations whose intention is to become publicly listed within 12 months.
Rulings
The fund, including each of its Subfunds, is not a person or a taxpayer for the purposes of the Act and as such, they are treated as fiscally transparent for the purposes of the Act.
For the purposes of Part XIII withholding and section 116, any amount paid or credited by a payer to the Canadian Sub-custodian in respect of the property held by the Subfund on behalf of the Pension Fund, including purchase consideration for such property, will be considered an amount paid or credited to the Pension Fund in proportion to its participation in the assets and income of the particular Subfund.