Section 237.3

Note that in some cases a counterparty could be considered an "advisor" or "promoter". This could be the case if a counterparty participates in structuring a transaction, or even if the counterparty merely provides assistance in implementing a transaction. If so, confidentiality provisions in agreements between counterparties could satisfy the confidentiality hallmark and contractual representations and indemnities as to taxes could satisfy the contractual protection hallmark.

In certain sectors of financial services, e.g., asset management or securities distribution, volume-based compensation for services is the norm. We note that the legislation does not refer to the number or value of securities that may be sold, nor does it refer to a fee based on net asset value or a similar concept. We understand that standard asset management and securities distribution fees are not intended to trigger this hallmark or to be subject to penalty.

If the undertakings by a fund manager extend to assisting in the resolution of tax disputes, this may trigger the contractual protection hallmark. We understand that the normal commercial practice of issuers and securities dealers distributing securities into the U.S. private placement market under a 144A offering would be to obtain deemed undertakings in the offering memorandum from prospective investors who are qualified institutional buyers, not to further disclose the offering memorandum, in order to ensure compliance with U.S. securities laws. Where the offering memorandum describes the details or structure of the transaction or series giving rise to a tax benefit, it is important that restrictions not extend to disclosure of the details or structure of the transaction or series.