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Fees

Independent Review Inc. charges a one of set-up fee for each IRC and an annual maintenance fee (both payable in advance).

Independent Review Inc.'s current fee schedule is available upon request.

IRC Expenses

Pursuant to the Instrument, IRC's must have the authority to set and pay the compensation and proper expenses for the members of the committee, from the assets of the Fund. In addition, the IRC can call for independent professional advice, again at the expense of the Fund. This can make it difficult for the Fund to forecast the total annual cost of maintaining the IRC.

Independent Review Inc. ensures that the set up fee and the fixed annual maintenance fees agreed with the Fund will cover all of the expenses of running the committee, with the exception of any Outside Counsel fees. The Fund is not, therefore, subject to any unexpected, additional expenses, charges or membership fees in respect of an Independent Review Inc. committee.

The costs of operating an IRC include the following:

  1. Management time and legal costs for set up of the IRC, selection of IRC members, creation of a conflict of interest policy and procedures manual and the IRC written charter;
  2. IRC member fees;
  3. “Search” fees where external selection of candidates is required;
  4. Costs of setting up and running orientation and continuing education programs for IRC members;
  5. Insurance premiums;
  6. Fees for Outside Counsel where requested by the IRC; and
  7. Administration time and costs to run the IRC and maintain minutes and records (this is an internal cost if the fund manager runs the fund’s IRC).

The regulators have indicated that they think smaller fund families will have to pay around $50,000 to $250,000 per annum to run an IRC. Larger fund families may find that the total cost exceeds $250,000 per annum.
 
It is important to note that, following the manager’s setting of the initial compensation and expenses of the IRC, the IRC has the sole authority for determining the compensation and proper expenses of its members. However, the Instrument requires the IRC to set “reasonable” compensation and proper expenses for its members.

The IRC must consider the manager’s recommendations, if any, when setting its compensation and expenses and the IRC’s most recent previous assessment of its compensation (as part of the regular “self-assessment” process). Among the factors the IRC and manager should consider when determining the appropriate level of compensation are the following:

  • the number, nature and complexity of the investment funds and the fund families for which the IRC acts;
  • the nature and extent of the workload of each member of the IRC, including the commitment of time and energy that is expected from each member;
  • industry best practices, including industry averages and surveys on IRC compensation; and
  • the best interests of the investment fund.

The IRC may also engage independent legal counsel and other advisors (e.g. industry experts) to help the members deal with issues beyond the level of their expertise or to understand different practices among investment funds, at the expense of the fund.

The fund must pay from the assets of its fund all reasonable costs and expenses reasonably incurred in the compliance with the Instrument. The manager may reimburse the fund for any of those costs.

The manager must ensure that the costs associated with the IRC have been allocated on an equitable and reasonable basis among the investment funds for which the IRC acts (e.g., based on which funds use the IRC the most). Where the manager does reimburse a fund for any of the costs associated with the IRC, this must be disclosed in the prospectus of the relevant fund.  No costs that the manager or the fund would ordinarily incur in the operation of the fund without the presence of the IRC (e.g., rent) may be charged to the fund.

Among the costs that may be charged to the fund are the following:

  • the compensation payable to the members of the IRC;
  • the proper expenses payable to the members of the IRC (including the costs of travel, communications and buying separate insurance coverage);
  • the compensation and expenses payable to any independent counsel and other advisers employed by the IRC;
  • the reasonable fees and expenses payable by the committee to establish an independent “secretariat” for the IRC;
  • the costs of any programmes for the orientation and continuing education of the members of the IRC; and
  • the costs and expenses associated with any special meeting of securityholders called by the manager to remove a member or members of the IRC.

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