The trust deed for a "quasi-mutual fund trust" described in s. 204.4(2)(d) provided that payment of unit redemption proceeds “shall be made promptly after receipt of a redemption request in proper form.” Regarding whether this satisfied the redeemable-on-demand requirement of s. 108(2)(a), the Directorate first stated:
[A] unit trust which complies with the conditions for redemption imposed by the applicable securities commission in the province where the fund is registered will generally meet the requirements of paragraph 108(2)(a). Based on the type of fund involved, the securities commissions have established conditions for the redemption of units which include time limits for the payment of redemption proceeds, the frequency of valuation dates, and the maximum notice period to be given.
Turning to the above clause, it stated:
Considering the ordinary meaning of the word prompt, the fact that the fund is primarily investing in assets that are liquid (i.e., Canadian equity securities) and that the Valuation Day for the fund is weekly, a good argument can be made that the wording of this provision meets the redeemable on demand requirement even though the provision does not specify a set number of days in which payment for redeemed units has to be made. … [I]t is our view that the requirements of paragraph 108(2)(a) have been satisfied.
However, it indicated that a provision of the trust deed allowing the fund manager to require a unitholder to provide up to 90 days written notice of an intention to redeem any units “may not be consistent with the requirements of paragraph 108(2)(a).”