Trust and LP
The Trust, which will be settled by an officer of its Manager, will invest directly, but mostly through investing in the single class of (Class A) limited partnership units a limited partnership (LP), which "will provide a prudent balance between long-term capital appreciation and present income." A majority of the directors of the general partner (GP) will not be trustees of Trust. GP will be wholly-owned by the Manager, who also will be the sole trustee of the Trust.
Distribution of Trust Units
An unlimited number of three classes (Class A, Class B and Class O) of Trust Units will be offered on a continuous basis to subscribers in specified provinces, and there will be a lawful distribution of Trust Units within the meaning of Reg. 4801(a) so as to satisfy the requirements respecting number of unitholders to be a mutual fund trust. The Trust Units will be unlisted. Immediately after units of the Trust are issued to investors, the units of the settlor will be redeemed.
Trust 2
The Trust will subscribe for one unit of Trust 2 and, following the redemption of the unit of the settlor, the Trust will be the sole beneficiary of Trust 2.
Redemption rights
Requests for redemption of Trust Units by a Unitholder must be made at least 30 days prior to the close of business on the Valuation Date on which the Trust Units are intended to be redeemed, and redemption proceeds will be paid in cash unless a specified monthly limit is exceeded, in which case the excess over that limit of the redemption price (which is the fair market value of the redeemed Trust Units as determined by the Trustee) is satisfied through the delivery of marketable securities held directly by the Trust or through the issuance of interest-bearing notes (the “Notes”) of Trust 2, which are issued to Trust in exchange for the transfer by it to Trust 2 of LP units and then distributed in specie to the redeemed Unitholder. Any capital gains realized as a result by the Trust may be treated as having been paid to the redeemed unitholder. Interest on the Notes (which will not be qualified investments for RRSPs etc.) will be serviced by returns on securities held by LP. The Trustee may suspend or postpone the right to redeem Trust Units and may postpone the date of payment upon redemption for any period, provided that such suspension or postponement complies with securities legislation.
Rulings
The terms of the redemption feature will satisfy the requirements of s. 108(2)(a)(i) for purposes of determining whether the Trust qualifies as a unit trust.
The proposed transactions described above will not, in and of themselves, adversely impact the qualification of the Trust as a mutual fund trust within the meaning of s. 132(6)(b).
Opinion
Should a postponement or suspension of the right to redeem Trust Units occur and that postponement or suspension exceeded a period of more than one year, the Trust would cease to meet the requirement of s. 108(2)(a)(i).