Fund
The Fund constitutes a collective investment vehicle that is not a body corporate, a partnership or a limited partnership, under which the Unitholders by contractual arrangements (set out in a deed) between a manager and a depositary, beneficially own the underlying property as tenants in common – with their Units representing proportionate interests in the Fund. Contracts entered into by the non-resident manager for the acquisition, management or disposal of property are binding on the unitholders. Pooling in relation to separate parts of the property is permitted and the Unitholders are entitled to exchange rights in one part for rights in another.
Subfund
The Deed states: “Any reference in this Deed to Units being issued “in respect of” a Sub-fund or “relating” to a Sub-fund shall be construed as a reference to Units which give the holder of them co-ownership of that part of the … Property comprising the Sub-fund in question and the entitlement … to exchange co-ownership of that part of the … Property for that part of the … Property comprising any other Sub-fund.” Each Sub-fund holds a separate group of assets to be managed by the Investment Manager, with the rulings relating to particular Sub-funds which may hold Canadian securities.
Classes within Subfund
The Units of a particular Sub-fund may be further broken down into different Classes which, although they participate proportionately in the ownership of the assets of the particular Sub-fund, may differ in other respects (e.g., management fees, functional currency; and different entitlements to gross income net of withholding tax which may arise due to different Unitholder tax profiles.) Investors with different tax profiles are required to invest in separate Classes such that investors do not benefit from the tax status of others (e.g., a lower withholding tax rate).
Depositary and Custodians
The non-resident Depositary, who deals at arm’s length with the manager, is responsible for acting as depositary of the Fund in accordance with the Deed. The Depositary has delegated its duties and responsibilities to the Custodian (a non-resident subsidiary of the Depositary) which, in turn, has delegated its Canadian duties and responsibilities (namely its duties and responsibilities respecting Canadian securities) to the Sub-custodian, a Canadian subsidiary of the Depositary.
Country A tax treatment
The Fund is regarded as fiscally transparent by Country A. For Country A capital gains tax purposes, a switch of Units in one Sub-fund for Units in any other Sub-fund is treated as a redemption of the Original Units and a purchase of New Units.
Rulings
The Fund and each of the relevant Sub-funds is treated as fiscally transparent for the purposes of the Act.
For the purposes of Part XIII and s. 116, any amount paid by a person to the Sub-custodian respecting Sub-fund Canadian securities will be considered to arise at the time of payment and to have the same character and source in respect of each Unitholder thereunder in proportion to the number of Units held by that Unitholder that represents its participation in such property.