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INDEPENDENT REVIEW COMMITTEE
Report to Securityholders
January 31, 2017
We are pleased to publish the Independent Review
Committee’s (“IRC”) Annual Report to
Securityholders relating to investment funds managed
by LOGiQ Capital 2016 (formerly Front Street
Capital 2004) (the “Manager”) having a fiscal year
end of December 31, 2016, as listed in Appendix A
(the “Funds”).
The IRC’s mandate is to review and to provide
approval or recommendations in respect of conflicts
of interest that arise between the Manager’s own
interests and the Manager’s duty to manage the
investment funds in the Funds’ best interests. The
Manager is responsible for referring to the IRC any
matters in which a reasonable person could view the
Manager as having an interest that may conflict with
its ability to act in the best interests of the investment
funds, unless they are addressed in standing
instructions previously approved by the IRC
(“Standing Instructions”). The IRC reviews each
matter and provides its approval or recommendation
as to whether the proposed course of action will
achieve a fair and reasonable result for the Funds.
The IRC has adopted a written charter that includes
the IRC functions, and the procedures it will follow
when performing its functions.
Huggins was first appointed member of the IRC in
2010 and each member was reappointed by the
Manager in 2016. Each IRC member is independent
of the Manager, its affiliates or related entities.
Ownership of Securities
i.
ii.
iii.
As at December 31, 2016, the aggregate
percentage of securities of each class or
series of voting or equity securities
beneficially owned, directly or indirectly, by
members of the IRC did not exceed 10
percent;
As at December 31, 2016, no member of the
IRC beneficially owned, directly or
indirectly, any class or series of voting or
equity securities of the Manager; and
As at December 31, 2016, the percentage of
securities of each class or series of voting or
equity securities beneficially owned, directly
or indirectly, in aggregate, by members of
the IRC was less than 0.01 percent.
IRC APPROVALS AND
RECOMMENDATIONS IN FISCAL
2016
John Clarke (Chairperson)
Frank Cooper
Gary Huggins
The IRC has approved certain Standing Instructions
which permit the Manager to proceed with the
specific action set out in the Standing Instructions on
an ongoing basis, without having to refer the Conflict
of Interest Policy or its proposed action to the IRC,
provided that the Manager complies with its terms
and conditions. The Manager provided written and
verbal reports to the IRC evidencing its reliance and
compliance with any terms and conditions in any
Standing Instructions.
Mr. John Clarke and Mr. Frank Cooper were first
appointed members of the IRC in 2007 and Mr. Gary
On February 23, 2016, the IRC reviewed and
approved an update to the IRC’s Standing
THE IRC
Members
Instructions to reflect the change of control of the
Manager that occurred on February 22, 2016.
On April 19, 2016, the IRC reviewed, confirmed and
ratified the Front Street Flow-Through 2014-I
Limited Partnership and Front Street Flow-Through
2014-II Limited Partnership rollovers of limited
partnership units into Class B shares of Front Street
Resource Growth and Income Class.
On April 19, 2016, the IRC reviewed and updated the
Manager’s policy and procedures on conflicts of
interest to address potential conflict issues raised by
the Ontario Securities Commission (the “OSC”)
arising from an investment made by a fund (or a
portfolio) managed by the Manager, and for which
the Manager was also the portfolio advisor, resulting
from the common majority ownership of the Manager
and Marquest Asset Management Inc. following the
change of control of the Manager in February 2016.
While the Manager did not raise any other conflict of
interest matter with the IRC in the last fiscal year of
the Funds, the Manager acted in the following
conflicts of interest matters where the IRC had
previously provided Standing Instructions in
accordance with the Manager’s Conflict of Interest
Policies:
a.
b.
c.
d.
Execution of Fund Trades through Tuscarora
(including the receipt by Tuscarora of
associated commissions);
Inter-Fund Trading by the Funds;
Allocation of Trades amongst Funds at the
Discretion of the Manager; and
Funds investing in other funds managed by
the Manager and/or for which the Manager
was the investment advisor.
COMPLIANCE
The IRC is not aware of any instance in which the
Manager acted, with respect to the Funds, (a) without
referral to the IRC on a matter that was required to
have been referred; (b) in contravention of a
recommendation of the IRC; or (c) in contravention
of any conditions in any Standing Instructions or the
Manager’s conflict of interest policy.
ANNUAL ASSESSMENTS
The IRC conducted a self-assessment review during
the financial year. Following the self-assessment
review and for the purposes of reporting to the
Manager, the IRC provided to the Manager the
minutes and materials of the IRC meeting addressing
that review.
In accordance with the IRC’s written charter, the IRC
conducted an annual review of the following: the
adequacy and effectiveness of the Manager’s written
policies and procedures concerning conflicts of
interest; the adequacy and effectiveness of the
Standing Instructions provided to the Manager; and
Compliance with any conditions imposed by the IRC
in a recommendation or approval provided.
IRC COMPENSATION
For the period January 1, 2016 to December 31,
2016, members of the IRC were paid aggregate fees
of $6,855 allocated to the Funds. These fees consisted
of pro rata amounts based on an annual retainer for
the chairman of $30,000 and for the other members
of $25,000 each, including three IRC meetings per
year, and any expenses reasonably incurred by the
IRC members. Additional fees of $3,000 were billed
for IRC meetings attended by the member over and
above three meetings per year in respect of the Funds.
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On an annual basis the IRC determines its
compensation for the following fiscal year, giving
consideration to the following:
i.
ii.
iii.
iv.
v.
the best interest of the Funds and the other
funds within the Front Street family of
funds;
the fact that each Fund must pay its
reasonable allocation of the compensation of
the IRC from the assets of the fund;
compensation paid to the IRC should fairly
and reasonably reflect the general and
specific benefits accruing to the fund;
the number, nature and complexity of the
funds for which the IRC acts; and
the nature and extent of the workload of
each of the members of the IRC in carrying
out his or her duties.
APPENDIX A
LIST OF FUNDS (December 31 year ends)
MUTUAL FUNDS
Front Street Tactical Bond Fund
Front Street Growth Fund
FOR FURTHER INFORMATION, PLEASE CONTACT
LOGIQ CAPITAL 2016
33 YONGE STREET, SUITE 600
TORONTO, ONTARIO M5E 1G4
PHONE: 416-597-9595
FAX: 416-597-9325
EMAIL: [email protected]
VISIT FRONTSTREETCAPITAL.COM
This report is available on LOGiQ Capital 2016’s
website at http://www.frontstreetcapital.com or you
may request a copy, at no cost to you, by contacting
the Manager at 416-597-9595.
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