Getting the Deal Through – Private Equity 2012 – Fund ... - Gowlings

FUND FORMATIONCanada22 Tax treatiesPlease list any relevant tax treaties to which your jurisdiction is a partyand how such treaties apply to the fund vehicle.Canada is party to more than 80 bilateral tax treaties, generally includinga treaty with every other major industrial nation. The treaties areof broad application and are not specific to fund vehicles. Canada isalso a party to 13 tax information exchange agreements, with manymore at various stages of implementation or negotiation.23 Other significant tax issuesAre there any other significant tax issues relating to private equityfunds organised in your jurisdiction?There are no other significant tax issues unique to private equityfunds in Canada.Selling restrictions and investors generally24 Legal and regulatory restrictionsDescribe the principal legal and regulatory restrictions on offers andsales of interests in private equity funds formed in your jurisdiction,including the type of investors to whom such funds (or private equityfunds formed in other jurisdictions) may be offered without registrationunder applicable securities laws in your jurisdiction.Generally across Canada, the sale of securities of any type toCanadian investors would require the issuer, absent prospectusexemption, to prepare, file and clear a prospectus with the applicablesecurities regulator and then deliver this document to the purchaserof securities. The two most common prospectus exemptions that canbe relied on when selling securities to Canadian investors include sellingto any investor who subscribes as principal for interests have anaggregate cost of C$150,000, which amount is paid in cash in full atthe time of the purchase of interests; or any ‘accredited investors’ thatincludes high-net worth individuals, institutional investors, financialinstitutions and governments.If an investor later decides to re-sell the interests, it generally willbe required to rely on the ‘accredited investor’ or another availableprospectus exemption in order to do so.Within 10 days of the closing of the sale of the interests, thefund will be required to report the trade and pay a filing fee to thesecurities regulators of each province where purchasers of the fundinterests reside.Update and trendsGowling Lafleur Henderson LLPCanada remains an attractive investment destination for privateequity. It is expected that the investment pace, with a focus onnew investments, will be more active in 2012 than in 2011,particularly in the areas of energy and infrastructure.As is noted above, interests in private equity funds, by their verynature, are unlikely to ever be distributed by way of a prospectus.25 Types of investorDescribe any restrictions on the types of investors that may participatein private equity funds formed in your jurisdiction (other than thoseimposed by applicable securities laws described above).There are no such restrictions.26 Identity of investorsDoes your jurisdiction require any ongoing filings with, or notificationsto, regulators regarding the identity of investors in private equity funds(including by virtue of transfers of fund interests) or regarding thechange in the composition of ownership, management or control of thefund or the manager?As described in questions 4 and 24, the filing that is often required tobe made following an issuance of partnership interests in a particularjurisdiction may require disclosure about investors in such jurisdiction(including their names, addresses, telephone numbers, aggregatepurchase price and type of securities purchased). Such informationis collected by the securities regulators for the purposes of administrationand enforcement of securities legislation and, subject to thecomments in question 4, the names of the investors are not publiclyavailable.27 Licences and registrationsDoes your jurisdiction require that the person offering interests in aprivate equity fund have any licences or registrations?As a general rule, absent international dealer registration exemption,as described in question 15, any person or company who is engagedin or is holding itself out as being in the business of ‘trading in securities’in any Canadian jurisdiction is required to register as a dealer.Bryce A KraekerVince F ImertiMyron B Dzulynskybryce.kraeker@gowlings.comvince.imerti@gowlings.commyron.dzulynsky@gowlings.comSuite 1600, 1 First Canadian Place Tel: +1 416 862 7525100 King Street West Fax: +1 416 862 7661Toronto, ON M5X 1G5www.gowlings.comCanadaOther offices: Toronto, Ottawa, Montreal, Calgary, Vancouver, Hamilton, Waterloo Region, London and Moscow32 Getting the Deal Through – Private Equity 2012