Toronto-based GrowthWorks Commercialization Fund Ltd. Thursday announced its decision to suspend Class A share redemptions and to close the fund’s 14 Series Share offering.<\/p>\n
The labour-sponsored investment fund is facing a $1.32 million liability for taxes and penalties that may be imposed as a result of an audit by the Ontario Ministry of Finance.<\/p>\n
On Nov. 29, 2013, the fund announced that it had recorded the liability for the fund’s 05 Series of Class A Shares based on further developments related to preliminary audit findings by Ontario Finance of the fund’s compliance with certain investment requirements under the Community Small Business Investment Funds Act (Ontario) for the years 2005 through 2008.<\/p>\n
The fund said Thursday that it has now received the final audit findings for these years and that Ontario Finance has not revised its preliminary findings.<\/p>\n
Toronto-based GrowthWorks Capital Ltd., the manager of the fund, says it disagrees with the audit findings and intends to initiate objection proceedings with Ontario Finance.<\/p>\n
GrowthWorks says the $1.32 million liability was allocated to the 05 Series of Class A Shares because the 05 Series represents a consolidation of the Series that were issued and participating in the fund’s venture portfolio during the period under review. The liability does not affect the net asset value per share of other Series, namely the 10 Series, 11 Series, 12 Series, 13 Series, or 14 Series.<\/p>\n
Next: Suspension of Class A Share redemptions<\/em> GrowthWorks notes the obligation to pay the assessed taxes and penalties arises immediately. Under applicable laws, the fund can process Class A Share redemption requests only if after doing so it would remain in a position to pay its liabilities as they become due. The fund’s board of directors says it cannot conclude that the fund would meet this statutory test if it were to process redemption requests.<\/p>\n Accordingly, the fund will not process redemption requests until the board determines that the fund would meet this test.<\/p>\n GrowthWorks says “there can be no assurance as to when, or if, the fund will have sufficient cash available to process Class A Share redemptions.”<\/p>\n The fund will continue to allow shareholders to request redemptions of their Class A Shares. However, GrowthWorks says the fund cannot process redemption requests at this time, and requests cannot be submitted electronically through FundServ.<\/p>\n
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Suspension of Class A Share redemptions<\/strong><\/p>\n