Fund Formation & Structuring
We design and implement private investment vehicles that align with your strategy, governance, investor profile, and tax considerations with scalable documentation and a streamlined path to launch.
How We Help
Limited Partnerships (GP/LP)
- Formation of GP entities and fund LPs
- Limited Partnership Agreements, side letters, waterfalls, and carried interest mechanics
- Subscription packages, closings, and ongoing admission procedures
- Cross-border parallel/feeder structures for U.S. and Canadian investors
Real Estate Investment Trusts (REITs)
- REIT structuring and drafting declarations of trust
- Offering memoranda and private placement disclosure for exempt market capital raises
- Property holding structures, joint ventures, and manager governance frameworks
- Investor disclosure and NI 45-106 compliance, including exempt market dealer coordination
Mutual Fund Trusts (MFTs)
- Trust structuring, Income Tax Act MFT qualification analysis, and drafting declarations of trust
- Valuation methodology, liquidity structures, and redemption framework design
- Offering memoranda and private placement disclosure for exempt market capital raises
- Investor disclosure and NI 45-106 compliance, including exempt market dealer coordination
Mortgage Investment Corporations (MICs)
- Incorporation, share architecture, and distribution policies
- OM preparation tailored to mortgage credit strategies
- Servicing/administration arrangements and related-party oversight
- Compliance frameworks aligned with regulator guidance
- MIC Income Tax Act qualification analysis
Management Company Structuring
- Formation and governance of manager/advisor entities
- Management agreements, carry arrangements, and profit-share models
- NI 31-103 registration analysis and exemptions
- Multi-entity ownership/control and operating structures
Typical Clients: Real estate sponsors, private equity and credit managers, venture funds, family offices, and multi-fund platforms.
Fund Formation & Structuring FAQ
General information only. Not legal advice. Viewing this content does not create a solicitor-client relationship.
The most common structure for a private investment fund in Ontario is a limited partnership with a corporate general partner. This structure offers contractual flexibility under the Limited Partnerships Act (Ontario), tax flow-through treatment under the Income Tax Act (Canada), and compatibility with prospectus exemptions under NI 45-106.
In a typical structure, a corporation acts as general partner to manage liability, and a separate management entity may provide advisory or administrative services.
Trust structures, including mutual fund trusts and real estate investment trusts, are used where redemption features, distribution policies, or tax considerations make a trust vehicle more appropriate.
A fund is considered an “investment fund” under the Securities Act (Ontario) if it meets the statutory definition of either a “mutual fund” or a “non-redeemable investment fund.” A mutual fund is generally characterized by redemption rights at a price determined by reference to net asset value. A non-redeemable investment fund is an issuer whose primary purpose is investing money provided by securityholders who do not have day-to-day control over investment decisions.
Classification is functional and fact specific. Regulators consider investor passivity, the nature of the underlying assets, redemption mechanics, and whether the entity is carrying on an active business as opposed to primarily investing in securities. Some real estate development or operating structures may fall outside the investment fund definition where their primary activity is an active business rather than portfolio investment.
If a structure qualifies as an investment fund, regulatory consequences may include investment fund manager registration analysis under NI 31-103 and, depending on whether the fund is a reporting issuer or a non-reporting issuer mutual fund, the application of NI 81-106 continuous disclosure requirements.
Redemption rights at a price determined by reference to net asset value (NAV) are a defining feature of a “mutual fund” under the Securities Act (Ontario). If investors are entitled to redeem their securities on demand, or within a short period, at NAV, the structure will often meet the statutory definition of a mutual fund.
This classification applies regardless of whether the fund is publicly offered or privately placed under NI 45-106. Mutual fund status may result in the application of NI 81-106 and influence registration analysis under NI 31-103. Sponsors should assess redemption mechanics carefully at the structuring stage.
Registration under NI 31-103 depends on the activities carried out, not simply on forming a fund. A sponsor may require registration as an investment fund manager, portfolio manager, or exempt market dealer depending on whether it directs the fund’s affairs, exercises discretionary investment authority, or engages in the business of trading securities.
Many sponsors distribute fund securities through a registered third-party exempt market dealer in reliance on section 8.5 of NI 31-103. A careful functional analysis under the Securities Act (Ontario) and NI 31-103 is required before launching capital-raising activities.
Tax treatment under the Income Tax Act (Canada) is a central factor in structure selection. A limited partnership is generally treated as fiscally transparent for Canadian income tax purposes. Income and losses are computed at the partnership level and allocated to partners, who include their share in income in accordance with the partnership agreement and the Act. This structure is common in private equity, credit, and real estate development strategies.
A trust may qualify as a “mutual fund trust” under subsection 132(6) of the Income Tax Act if it satisfies the prescribed conditions in the Act and Regulations. A publicly traded trust that would otherwise be subject to the SIFT regime may seek to meet the definition of “real estate investment trust” in section 122.1. A mortgage investment corporation must satisfy section 130.1 throughout the taxation year to maintain MIC status and deduct dividends paid to shareholders. Each structure carries distinct asset composition tests, ownership thresholds, and distribution requirements that must be assessed alongside securities law considerations.
Launching a private fund in Ontario typically requires both constituting documents and offering documentation. Constituting documents may include a limited partnership agreement, declaration of trust, or articles of incorporation, together with management agreements and governance policies.
From a securities law perspective, subscription agreements and investor questionnaires are required to support reliance on prospectus exemptions under NI 45-106. If the Offering Memorandum exemption is used, a compliant offering memorandum in Form 45-106F2 format must be prepared. Sponsors must also assess registration documentation and compliance systems under NI 31-103 before commencing capital raising.
