The primary Securities legislation is National Instrument 81-107 Independent Review Committee for Investment Funds (“NI 81-107” or the “Instrument”).
Every investment fund that is a reporting issuer requires an Independent Review Committee (“IRC”). An IRC is a fully independent body, composed of at least three individuals whose role is to oversee all decisions involving an actual or perceived conflict of interest faced by the fund manager in the operation of the fund.
Conflicts of Interest need an Independent Perspective
A conflict of interest may arise when the fund manager’s own interests conflict with the manager’s duty to manage an investment fund in the best interests of the fund.
The Instrument requires that the manager must refer all conflict of interest matters, and its proposed course of action on those matters, to the IRC for the IRC’s review or determination so that an independent perspective can be brought to bear on the manager’s proposed action. The Instrument is premised on the belief that a manager may not be able to objectively determine whether it is acting in the best interests of the investment fund when it has a conflict of interest.
For more information about NI 81-107, click here.