Merger of GFO Connor, Clark fund into AUI fund gives unitholders choice of capital loss or rollover treatment

An unsuccessful Connor, Clark listed mutual fund trust (GFO) is being merged into another more successful Connor, Clark fund (AUI) under the s. 132.2 merger rules.  GFO unitholders who want to realize a capital loss can redeem their units in advance.

The introduction of s. 132.2 followed IFIC lobbying to accommodate this style of portfolio mutual fund merger, although the s. 132.2 rule which emerged also accommodated income fund mergers. In a conversation of over a decade ago with the legislative drafter, he indicated that the rule was intended as a quick and dirty fix to provide a rollover and nothing much more, rather than providing a detailed merger code such as for a s. 87 amalgamation or 88(1) winding-up.

However, this type of "classic" portfolio fund merger tends to result in fewer anomalies than in a REIT or other income fund merger.

Neal Armstrong.  Summary of Connor, Clark & Lunn Financial Opportunities Fund Circular under Mergers & Acquisitions – S. 132.2 Mergers – Portfolio Mutual Fund Mergers.