Background
The Fund is a mutual fund trust, a REIT and a closed-end unit trust described in s. 108(2)(b). Except for its Special Units, it has only one class of units (the “Units”) outstanding, which trade on an exchange. The holders of exchangeable Class B units of a subsidiary limited partnership of the Fund hold equal numbers of Special Units of the Fund, which only have voting rights and can only be transferred together with such exchangeable units.
Proposed transactions
In order to qualify as an open-end unit trust under s. 108(2)(a), the Declaration of Trust will be amended to add a retraction right (the “Right of Redemption”) to the Unit terms and to make consequential amendments to the unit terms including deleting various investment restrictions. Regarding the notes that could be issued and transferred pursuant to the Right of Redemption, the ruling letter stated:
It is expected that the maturity date for [such] Notes … will be XXXXXXXXXX years from the date of issuance, and in any event, will not exceed XXXXXXXXXX years from the date on which they are issued.
The “Additional Information” also stated:
The amendments to the Declaration of Trust will not result in a resettlement of the Fund or in the creation of a new trust under the laws of XXXXXXXXXX.
Rulings
- Such amendments will not by themselves result in a disposition by the Fund of its property or in a resettlement of the Fund for purposes of the Act.
- The addition of the Right of Redemption will not by itself result in a disposition of Units.
- The Fund will qualify as an open-end unit trust pursuant to s. 108(2)(a) immediately after such addition.
- The proposed transactions will not affect the qualification of the Fund as a mutual fund trust or real estate investment trust.
Regarding the first two rulings, the CRA summary stated:
1. This is similar to several previous rulings. There is no resettlement under provincial law and there is not a fundamental change in the terms of the trust. There are no actual dispositions of [property] by the Fund.
2. The amendments to the DOT will not cause any person to become a beneficiary, nor will any person cease to be a beneficiary. There will be no resulting redemption or cancellation of units, and no material change to the rights of unitholders.