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K2 & Associates Investment Management Inc. (“K2 & Associates” or “K2” or “the Manager”) is a Canadian multi-strategy, event-driven hedge fund manager with a 20+ year track record of successfully managing money, protecting capital, and creating value. We built our funds as tools for families — including our own — to build wealth while protecting what matters to them.
K2 is registered in various categories under the Securities Act in Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, and Quebec. The Ontario Securities Commission is the principal regulator for K2, which is registered in the category of Investment Fund Manager (IFM), Portfolio Manager (PM) and Exempt Market Dealer (EMD) in the province of Ontario.
K2, as a securities dealer, is subject to the legislative requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing (TF) Act (PCMLTFA) including oversight by the Financial Transactions Reports and Analysis Centre of Canada (FINTRAC).
K2 is a participating firm with the Ombudsman for Banking Services and Investments (OBSI) and makes the services of the OBSI available to our clients in respect of eligible complaints.
The Canadian Administrators (CSA) website and SEDAR+ are publicly available tools for clients to review the specific registration details and the history for K2 and its registered representatives, including any prior disciplinary actions.
In December 2019, the Canadian Securities Administrators created a sweeping set of regulatory changes generally referred to as Client-Focused Reforms (CFRs). The first set of reforms focuses on the existing and reasonably foreseeable material conflicts of interest that may affect your interests as our client, including how we manage material conflicts in your best interest. A conflict of interest may arise where:
A conflict of interest is generally material if the conflict may be reasonably expected to influence either your decisions as a client, or the recommendations by K2 or its representatives, or the decisions of the client in the circumstances.
K2 primarily seeks to identify and manage conflict of interest through policies and procedures that includes:
There is a potential conflict of interest arising from the Sale of Products, Products and Services of Related and Connected Issuers, including funds manufactured and managed by our affiliates, and non-monetary benefits and cooperative markets and sales practices. These potential conflicts of interests are managed by K2 through a variety of controls that include, but are not limited to, the following:
The interests of the applicable affiliates of K2 & Associates Investment Management are detailed in our Relationship Disclosure Information and include, but are not limited to, the following corporations that are controlled by Shawn Kimel Investments Inc. (SKII).
Mr. Shawn Kimel, the beneficial owner of SKII, is the largest single shareholder of K2 with 66.5% ownership.
Westdale Construction Co. Limited (“Westdale”) maintains 31.5% ownership in K2. The beneficial owners of Westdale are members of the Kimel family and related to Mr. Shawn Kimel. The powers and responsibilities of the General Partner are set out in the Partnership Agreement
K2 makes two proprietary funds, The K2 Principal Fund L.P. and The K2 Principal Trust, available to certain acceptable and eligible clients.
The K2 Principal Fund L.P. (formerly The K2 Arbitrage Fund L.P.) (the “Partnership”) – Founded in December of 2000 as the flagship fund out of K2& Associates Investment Management Inc. is a broadly diversified Canadian and U.S. portfolio that employs a variety of strategies including event driven opportunities, structured products arbitrage, distressed securities, long/short equities and other opportunities.
The K2 Principal Trust – Opened in October of 2009, it is a Trust that invests primarily in the K2 Principal Fund L.P. and other tax-efficient investments. The trust is available for purchase through authorized dealers via FundSERV. The Trust is eligible for registered accounts.
Under certain circumstances, K2 may trade in, or recommend securities of, a related or connected issuer. A “related” issuer means a person or company that influences, or is influenced by, another person or company. A “connected” issuer is an issuer that has a relationship with K2 that, in connection with a distribution of securities of the issuer, may lead a reasonable investor to question if the issuer and K2 are independent. There are potential conflicts of interest which could arise in connection with K2 engaging in activities as an EMD and PM in respect of securities of related and connected issuers.
A “related issuer” means, in respect of K2, an issuer of securities over which K2 exercises a controlling influence (for example, through the ownership of, or direction or control over, voting securities) or an issuer of securities that exercises a controlling influence over K2. In this context, the term “influence” means having the power, directly or indirectly, to exercise a controlling influence over the management and policies of the issuer, whether alone or in combination with one or more other persons or companies.
A “connected issuer” means, in respect of K2, an issuer that has, or any related issuer of which has, any indebtedness to, or other relationship with:
Accordingly, an issuer is “connected” to K2 if, due to indebtedness or other relationships, a reasonable prospective purchaser of securities of the connected issuer might question K2’s independence from the issuer.
The K2 Principal Fund L.P. is a related and connected issuer of K2. The general partner of the Partnership is a limited partnership. The shareholder of the general partner of the general partner of the Partnership is also the controlling shareholder of K2. Certain directors of the general partner of the Partnership are also directors of K2 and directors of the general partner of the limited partnership which received the foregoing distributions. The general partner of the Partnership receives a nominal distribution of the profits of the Partnership. K2 receives fees from the Partnership. Under applicable securities legislation, the Partnership is a related and connected issuer of the Manager.
The K2 Principal Trust is a related and connected issuer of K2, which receives fees from The K2 Principal Trust.
Prior to engaging in any other activities where the issuer is either a related or connected issuer, K2 shall inform you of the existence of the relationship between K2 and the related or connected issuer, explain the conflict of interest, and explain how it could affect the services K2 provides to you. For a list of the current connected publicly traded issuers of K2, other than the issuers referred to above, please visit our disclosures on SEDAR+ and EDGAR. K2 will post a list of any connected issuer due to indebtedness or other relationships, other than the issuers previously identified, in this section of our website.
The currently identified material contracts relating to the Partnership are as follows:
Copies of such contracts may be inspected following their execution at the principal office of the General Partner during normal business hours.
The main service providers to K2 and its affiliates are as follows:
As principal distributor of the K2 Principal Fund L.P. and The K2 Principal Trust, K2 receives services and investment and client reporting tools from affiliates and other third-party market participants, which provide analysis and investment portfolio proposals. K2 leverages these tools in making investment recommendations to clients.
K2 also provides certain sales and market materials, corporate presentations, and other information on their proprietary funds to third parties and registered representatives for educational (Know Your Product) purposes.
Brokers or third parties may provide research goods and services and/or order execution goods and services at no cost to the Manager in exchange for brokerage business from the Manager’s managed accounts and investment funds. The Manager will follow the CFA Institute’s Soft Dollar Standards, as well as National Instrument 23-102 Use of Client Brokerage Commissions when it is deciding whether to place portfolio transactions through a particular dealer where such dealer, or a third party, will provide it with goods and services at no or reduced cost. The Manager may obtain data or research services that are a direct benefit to its investment decision-making process, such as market and technical data services or special research reports. Although the brokers involved in these soft dollar arrangements do not necessarily charge the lowest brokerage commissions, the Manager may nonetheless enter such arrangements when it is of the view that such brokers provide best execution and/or the value of the research and other services exceeds any incremental commission costs.
A potential conflict of interest can arise from offering both fee-based accounts with ongoing management and performance fees.This potential conflict of interest is managed through a robust account type suitability assessment and appropriateness evaluation considering the investment needs and objectives of our client. K2 has established controls including policies and procedures, account due diligence, compensation reviews, evaluation of best execution, account disclosures, and performance reporting to clients.
All costs are included as part of your investment in the Private Funds. K2 does not receive any commission or compensation for the sale of the units of a Private Fund to investors. All management fees and other fees are generally described in this disclosure as well as in the offering memorandum documents, which may include fees based on the percentage of the net asset value (NAV) of the fund; share of profits (performance fees) and other fees and expenses.
Please read the offering memorandum of the fund for the full details on fees, commissions, and distribution of profits.
Securities regulators expect K2 to enter into formal agreements if K2, or any of its registered individuals on its behalf, enter any arrangement with another entity or person that is a “referral arrangement”. Referral arrangements are those where K2 either pays or accepts a payment that will compensate K2, or another entity, for the referral of a client to or from K2.
K2 has standard form agreements for any referral arrangements that are subject to pre-approval by the Chief Compliance Officer (CCO) before the arrangement is completed. The agreements will clearly define the roles and responsibilities of each party and the amount of the fee.
K2 through its CCO will provide written disclosure to you, the client, that will include the nature of the referral arrangement, the arrangements are entered into in the future, the CCO has the responsibility of ensuring that K2 will comply with the referral arrangements requirements (including certain disclosure requirements) as set out in NI 31-103.
K2 will prepare annual statements for the K2 Principal Fund and interim financial statements for the K2 Principal Trust, to be distributed to investors according to their standing instructions.
The annual financial statements are required to be audited by an acceptable auditor, that is, a person or company that is authorized to sign an auditor’s report by the laws of the jurisdiction of Canada, and that meets the professional standards of that jurisdiction.
Interim financial statements are not required to be audited or reviewed, however, if this is the case, the financial statements must be accompanied by a notice indicating they have not been reviewed by an auditor. Interim financial statements are required to be filed within 60 days of the interim period end. Financial statements for the K2 Funds must contain all the statements, contents and disclosures required under NI 81-106. In addition, financial statements for the K2 Funds must be approved by the board of directors of K2 before the statements are filed or delivered or otherwise made available to security holders or potential investors in the K2 Funds.
In the normal course of business, K2 and certain affiliates are party to business related claims. The potential outcome related to existing matters faced by these entities are not determinable at this time. K2 is defending these actions and management believes that the resolution of these matters will not have a material adverse effect on the Partnership’s financial condition.
Performance data from the S&P/TSX Composite Index (“S&P/TSX”) is provided for information purposes only. A comparison of K2’s performance to the S&P/TSX is of limited use because K2 invests primarily in event driven and relative value strategies, employs leverage, and may invest in options and other securities not found in the market index. As a result, no broad market indices are directly comparable to the results of K2.
Please note that K2’s performance is net of all fees and expenses whereas benchmarks do not factor in commissions or other costs to invest and thus benchmark returns will seem higher than what you would earn on your account if you held the exact same securities as that index. Performance and NAV information provided is unaudited and net of all fees and expenses.
National Instrument 24-101 provides a framework in securities legislation for ensuring more efficient and timely processing of institutional trades. It requires participants in the institutional trading process to have in place processes and procedures that allow trade matching within prescribed limits. K2 is required to ensure compliance with the central requirements of the instrument for all institutional trades including, but not limited to, a Trade Matching Statement or Trade Matching Agreement. This document confirms that K2 has the processes and procedures in place to meet T+1 matching requirements. K2 has signed a trade matching statement which can be viewed by clicking the link below.
The Securities and Exchange Commission (SEC) recently implemented amendments to enhance the form used by certain funds to report information about their proxy votes (“Form N-PX”). The new obligations require institutional investment managers subject to the reporting requirements of section 13(f) of the Exchange Act to report annually on Form N-PX each say-on-pay vote over which they exercised voting power. Pursuant to the amendments, K2 makes the information disclosed under the most recently filed Form N-PX publicly available and free of charge on our website as soon as reasonably practicable after filing the report. Please click the following direct link for K2’s latest Form N-PX report on EDGAR:
Form N-PX Report for the period of July 1, 2023 to June 30, 2024
Effective corporate governance aims to align the long-term vision, mission, and values of the firm with the strategy of the business. In establishing our approach to Environmental, Social, and Governance (ESG), K2 carefully evaluated ESG standards in the context of our purpose, long held values and the overall objectives of our firm. K2 has an investing approach that has a long history of integrating ESG concepts. We are continuing to evolve this approach by more formally and holistically integrating ESG criteria and methodologies into our investment management process.
However, we may continue to utilize other considerations (quantitative research, fundamental analysis, and events) as the primary rationale for investment decisions. Consequently, we will not make the representation to you, our client, and promote to the public that K2 manages an ESG investment fund. Our success has always been driven by our multi-strategy approach to portfolio management and our objective will continue to focus on achieving above average returns. However, K2 will create a culture that integrates ESG metrics and actively monitors the impact of our actions from an ESG perspective.
It is important that there is active participation by any clients for K2 to conduct suitability assessments and enhanced due diligence, where applicable. K2 needs to fully understand, among other things, your financial understanding, situation, investment needs, objectives, situation, investment needs, objectives, investment experience and risk tolerance. This can only be assessed by collecting from you, accurate information about your personal and financial circumstances, including but not limited to, your marital status, age, occupation, number of dependents, income, and net worth. As part of opening an account with K2 you have provided us with accurate and current personal and financial information and have agreed to notify us immediately of any material changes. Should a situation arise where you may have questions with respect to your account or potential investment with K2, we should be contacted directly.
Securities rules require K2 provide an opportunity for you to name and provide contact information for a person that you trust who is mature, can conduct potentially difficult conversations about your personal situation and preferably is not involved with making decisions for your account (“Trusted Contact Person” or “TCP”) at account opening and on a periodic basis.
If applicable in your personal circumstances, K2 may, in our discretion, contact your TCP(s) or your legal representative(s) on file with us if we notice signs of financial exploitation or if you exhibit signs of diminished mental capacity as it relates to decisions involving financial matters relating to your account(s). K2 may also contact your TCP(s) to confirm your contact information if we are unsuccessful in contacting you after repeated attempts, particularly if failure to contact you is unusual. We may ask the TCP(s) to confirm the name and contact information of your legal representative(s) (e.g., attorney under a power of attorney or a legal guardian). You can change your TCP(s) or withdraw your consent for us to contact the TCP(s) by contacting via email at info@K2.ca or calling (416) 365-2155.
By providing TCP information, you have authorized K2 to contact the TCP(s), at our discretion, for the purposes noted above, and you have agreed to:
If we have a reasonable belief that you are being financially exploited or that you are experiencing diminished mental capacity which may affect your ability to make financial decisions relating to your account(s), we may place a temporary hold on your account or a particular transaction. We will provide you with a verbal or written notice explaining our actions, in addition to contacting your TCP, as above
To comply with Canadian legislation aimed at the prevention of money laundering and terrorism, the General Partner may require additional information concerning purchasers. If, as a result of any information or other matter which comes to its attention, the Partnership, the General Partner, the Manager, any director, officer or employee of any of the foregoing or their professional advisors, knows or suspects that a purchaser is engaged in money laundering and/or terrorist financing activity, such person is required to disclose the information or other matter for the purposes of satisfying his or her obligations under applicable anti-money laundering or anti-terrorist financing legislation. Such disclosure may be made to law enforcement, securities or other regulatory or self-regulatory authorities in Canada and such report shall not be treated as a breach of any restriction upon the disclosure of information imposed by law or otherwise.
K2 supports digital accessibility for people with disabilities. K2 is committed to building on the unique talents, experiences, and perspectives of individuals, including employees, clients and others who have dedicated their lives to promoting accessibility.
The Accessibility for Ontarians with Disabilities Act, 2005 (“AODA”) aims to create a more accessible Ontario by identifying and, to the extent possible, eliminating barriers experienced by people with disabilities. The Integrated Accessibility Standards regulation (the “IASR”), enacted under the AODA, sets out obligations with respect to five accessibility standards in the areas of Information and Communications, Employment, Transportation, Design of Public Spaces and Customer Service. ,K2 is subject to AODA as an Ontario registered firm and fits in the small firm categorization for implementing accessibility obligations based on total employees. This policy is prepared in accordance with K2’s responsibilities under AODA and applies to the provision of our services and goods not to the services or goods themselves.
K2 is continually improving the user experience for everyone and applying the relevant accessibility standards. K2 continues to review all our websites for ease and accessibility. Here are specific ways K2 is providing a more accessible service for clients:
K2 is further committed to ensuring that every firm employee receives equitable treatment with respect to employment, without discrimination, and receives accommodation in a timely manner where required, in accordance with the provisions of the Ontario Human Rights Code and the AODA and its regulations. Persons with disabilities may use their own assistive devices as required when accessing goods or services provided by K2.
K2 will ensure that appropriate training is provided on the requirements of the accessibility standards referred to in the IASR and on the Human Rights Code as it pertains to persons with disabilities. The training will be appropriate to the duties of the employee and refreshed when changes are made to the policy. New employees will be trained in a timely manner. This training ensures K2 employee have sufficient knowledge and familiarized on appropriate interaction with clients who may use assistive devices. K2 will maintain a record of the training.
K2 will ensure that support people accompanying clients will be welcomed. In situations where confidential information might be discussed, consent will be obtained from the client, prior to the disclosure of confidential information to the support person. K2 employees will be trained and familiarized on appropriate interaction with clients who may be accompanied by a support person.
A person with a disability who is accompanied by a guide dog or service animal will be allowed access to premises that are open to the public unless otherwise excluded by law. “No pet” policies do not apply to guide dogs, service animals, and/or service dogs. Persons who act on behalf of K2 will be trained and familiarized on appropriate interaction with customers who may be accompanied by a guide dog or service animal.
A complaint is a verbal or written statement from a client (the “Complainant”), or person acting on behalf of a Complainant, alleging a grievance or dissatisfaction with any product or service offered by K2 or a representative of K2, excluding any considered frivolous or vexatious, as determined in the sole discretion of K2 (a “Complaint”). Complaints can be sent by directly to K2 as follows:
K2 & Associates Investment Management Inc.
Attention Designated Complaint Officer
2 Bloor Street West, Suite 801
Toronto, Ontario, M4W 3E2.
If a solution cannot be found to the Complaint, the Complainant have right to independent dispute resolution of the matter. K2 must make the dispute resolution services available at its own expense. You may be eligible for the independent dispute resolution service offered by the Ombudsman for Banking Services and Investments (OBSI). Please visit the OBSI website for their complaint process, including important timelines and potential compensation thresholds you may be eligible to receive. If you are a Québec resident, you may consider the free mediation service offered by the Autorité des Marchés Financiers.
K2 may face unforeseen events that impact operations. K2 has an established Business Continuity Plan (“BCP”) to mitigate, respond and recover from a potential disruption or disaster. The BCP is tailored to the risks, size, nature, and complexities of our operations. K2 is committed to taking commercially reasonable steps to provide protection for essential activities and meet applicable obligations to its clients in the event of a significant business disruption. K2 has developed plans that include the ability to recover from situations including, but not limited to, unplanned evacuations, power outages, major water leaks, fire, loss of water, severe weather, pandemics, and facilities failures that may cause business interruptions.
Cyber risks are emerging threats to firm and client information which should be assessed regularly as new risks and vulnerabilities are identified. Cyber incidents, generally, are increasing in frequency, and can cause significant harm to an organization. K2 operates on the assumption that cyber incidents will arise during business. For technical help with our website or to discuss a technology related matter, please email support@k2.ca
K2 maintains an Incident Response Team to manage significant business interruptions and/or incidents. Please contact us by email info@K2.ca, phone (416) 365-2155, or visiting our offices at K2 & Associates Investment Management Inc., 2 Bloor Street West, Suite 801, Toronto, ON M4W 3E2 should you have any concerns regarding an incident, the safekeeping of your information and/or questions regarding any existing account or potential investment with K2. In the event of a significant business, K2 will post any necessary updates to this website.
Investment in the our funds involves certain risk factors. The following risks should be carefully evaluated by prospective purchasers. The following risk factors do not purport to be an exhaustive list of all risks involved in purchasing our funds. Purchasers should read K2’s entire Relationship Disclosure Information, including Offering Memorandum and consult with their professional advisors before determining to invest in our funds.
AN INVESTMENT IN THE PARTNERSHIP MAY BE DEEMED SPECULATIVE AND IS NOT INTENDED AS A COMPLETE INVESTMENT PROGRAM. A SUBSCRIPTION FOR UNITS SHOULD BE CONSIDERED ONLY BY PERSONS FINANCIALLY ABLE TO MAINTAIN THEIR INVESTMENT AND WHO CAN BEAR THE RISK OF LOSS ASSOCIATED WITH AN INVESTMENT IN THE PARTNERSHIP. PURCHASERS SHOULD REVIEW CLOSELY THE INVESTMENT OBJECTIVES AND INVESTMENT STRATEGIES TO BE UTILIZED BY THE PARTNERSHIP AS OUTLINED HEREIN TO FAMILIARIZE THEMSELVES WITH THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE PARTNERSHIP.
There is no market for units in our fund and their resale, transfer and repurchase are subject to restrictions imposed by the Limited Partnership Agreement, including consent by the General Partner, and applicable securities legislation. Consequently, holders of our fund units may not be able to liquidate their investment in a timely manner and the fund units may not be readily accepted as collateral for a loan.
An investment in the Partnership is not intended as a complete investment program. A subscription for units in our funds should be considered only by persons financially able to maintain their investment and who can bear the risk of loss associated with an investment in the Partnership. Purchasers should review closely the investment objectives and investment strategies to be utilized by the Partnership as outlined herein to familiarize themselves with the risks associated with an investment in the Partnership.
The performance of the trust and the K2 Principal Fund LP may be affected by general economic and market conditions, such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws, and national and international political circumstances. These factors may affect the level and volatility of securities prices and the liquidity of the trust and fund investments. Unexpected volatility or illiquidity could impair the profitability of the fund or result in losses.
Some of the securities in which the Partnership intends to invest are thinly traded or have no trading market and/or be restricted as to their transferability under applicable securities legislation. There are no restrictions on the investment of Partnership assets in illiquid securities. The valuation of these securities may be subject to a significant amount of subjectivity and discretion. It is possible that the Partnership may not be able to sell or repurchase significant portions of such positions without facing substantially adverse prices. If the Partnership is required to transact in such securities before its intended investment horizon, the performance of the Partnership could suffer.
The Partnership intends to use leverage to increase the amount of capital available for investments beyond the amount of the proceeds invested in the Partnership. Such leverage will permit the Partnership to control a greater amount of investments than the amount of capital required to execute such trades and thereby magnify the profits or losses which may be realized by the Partnership. The level of interest rates, generally, and the rates at which the Partnership can borrow, in particular, will also affect the operation results of the Partnership.
The use of leverage will magnify the volatility of the value of the Partnership’s investments portfolio. Leverage increases the Partnership’s returns if the Partnership earns a greater return on investments purchased with borrowed funds than the Partnership’s cost of borrowing such funds. However, the use of leverage exposes the Partnership to additional levels of risk, including (i) should the securities pledged to brokers to secure the Partnership’s margin accounts decline in value, the Partnership could be subject to a “margin call”, pursuant to which the Partnership will be required to either deposit additional funds with the lender or suffer mandatory liquidation of investment positions; (ii) greater losses from investments than would otherwise have been the case had the Partnership traded in cash markets and not borrowed to make the investments; and (iii) losses on investments where the investment fails to earn a return that equals or exceeds the Partnership’s cost of borrowing such funds. In the event of a sudden, precipitous drop in value of the Partnership’s assets, the Partnership might not be able to liquidate assets quickly enough to repay its borrowings or may be forced to sell investments at disadvantageous times in order to repay borrowings, further magnifying its losses.
The Partnership may engage in selling securities short. Selling a security short (“shorting”) involves borrowing a security from an existing holder and selling the security in the market with a promise to return it a later date. A short sale will result in a gain if the price of the securities sold short declines between the date of the short sale and the date on which securities are purchased to replace those borrowed. Should the security increase in value during the shorting period, losses will incur to the Partnership. There is in theory no upper limit to how high the price of a security may go which therefore exposes the portfolio to a theoretically unlimited risk of loss. There may be many investors and investment managers pursuing short selling strategies who are seeking to borrow the same securities. Therefore, it may not be possible at times for the Partnership to borrow the particular securities it wishes to sell short. Another risk involved in shorting is the loss of a borrow – a situation where the lender of the security requests its return. In cases like this, the Partnership must either find securities to replace those borrowed or step into the market and repurchase the securities. Depending on the liquidity of the security shorted, if there are insufficient securities available at current market prices, the Partnership may have to purchase securities in the open market at a disadvantageous time in order to cover the short, possibly at prices significantly in excess of the proceeds received in originally selling the securities short resulting in losses to the Partnership.
Purchasing and selling call and put options are highly specialized activities and entail greater than ordinary investment risk. Although the risk of loss is limited to the amount of the purchase price of the option, and investment in an option may be subject to greater fluctuation than an investment in the underlying security. In the case of the sale of an uncovered option there can be potential for an unlimited loss. To some extent this risk may be hedged by the purchase or sale of the underlying security or a future relating to the same underlying security.
A fund that invests in equity investments (like stocks or shares) or derivatives based on equities will be affected by conditions affecting the stock markets on which those equities are traded and by general economic conditions. A stock’s value is also affected by specific company developments.
Certain of the proposed transactions in which the Partnership invests may be renegotiated or terminated, in which case losses may be realized.
The Partnership may not have any specific limits on holdings in securities of issuers in any one country, region or industry. As a result, the Partnership’s portfolio may be subject to more rapid or dramatic changes in value than would be the case if the Partnership were required to maintain a wide diversification among companies, industries, regions, types of securities and other asset classes.
The Partnership may use derivative instruments. The use of derivatives in general presents additional risks to those applicable to trading only in the underlying assets. To the extent that the Partnership invests in derivatives it may take a credit risk with respect to parties with whom it trades and may also bear the risk of settlement default. When used for hedging purposes, an imperfect or variable degree of correlation between price movements of the derivative instrument and the underlying investment sought to be hedged may prevent the Partnership from achieving the intended hedge effect or expose the Partnership to the risk of loss. In addition, derivative instruments may not be liquid at all times, so that in volatile markets the Partnership may not be able to close out a position without incurring a loss. No assurance can be given that short sales, hedging, leverage and other techniques and strategies utilized by any the Partnership to hedge its exposure will not result in material losses.
The Partnership’s assets may be invested in securities of companies denominated in currencies other than the Canadian dollar. Accordingly, a portion of the income received by the Partnership may be denominated in non-Canadian currencies. The Partnership nevertheless will compute and distribute its income in Canadian dollars. Since the Partnership may invest in securities denominated or quoted in currencies other than the Canadian dollar, changes in currency exchange rates may affect the value of the Partnership’s portfolio and the unrealized appreciation or depreciation of investments. Further, the Partnership may incur costs in connection with conversions between various currencies.
The Partnership may invest at any time in the equity securities of smaller and less well established companies. The earnings and share prices of such companies tend to be more volatile and the markets for the shares tend to be less liquid, with resulting higher risk of loss, when compared to investments in larger and more established companies.
An investment in the Partnership provides limited liquidity. Fund units are not freely transferable. In certain circumstances, the Manager may exercise its discretion not to redeem fund units when requested or to suspend redemption rights.
The success of the Partnership will be largely dependent upon the research and services provided by the Manager.
The Manager will depend, to a great extent, on the services of a limited number of individuals in the administration of the Partnership’s activities. The loss of such individuals for any reason could impair the ability of the Manager to perform its investment management activities on behalf of the Partnership.
Although the Partnership will use its best efforts to achieve above average rates of return, no assurance can be given in this regard. An investment in our fund units should be considered as speculative and purchasers must bear the risk of a loss on their investment.
The Partnership is obligated to pay Management Fees, brokerage commissions and trustee, legal, accounting, filing and other fees and expenses regardless of whether the Partnership realizes profits.
K2 may be subject to regulatory, judicial, tribunal, and arbitration proceedings concerning matters arising in connection with the conduct of the Company’s businesses. There is a risk of actual or threatened legal actions that could include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages.
As with any investment, there are tax considerations related to the purchase and sale of units of our fund. Amendments or changes to the tax legislation can have a significant adverse implication on both the fund and its investors. Potential purchases and clients of K2 should consult their own professional advisors to assess the income tax, legal, and other aspects of the investment.
The potential distribution of a percentage of the profits to the Special LP Unit Holder may create an incentive for the General Partner and the Manager, given their common ownership and control, to cause the Partnership to make investments that are riskier or more speculative than would be the case in the absence of a return based on the profitability of the Partnership.
Under the LP Act, the General Partner has unlimited liability for the debts, liabilities, obligations and losses of the Partnership to the extent that they exceed the assets of the Partnership. The liability of each Limited Partner for the debts, liabilities, obligations and losses of the Partnership is limited to the value of money or other property the Limited Partner has contributed or agreed to contribute to the Partnership. In accordance with the LP Act, if a Limited Partner has received a return of all or part of the Limited Partner’s contribution to the Partnership, the Limited Partner is nevertheless liable to the Partnership, or where the Partnership is dissolved, to its creditors, for any amounts not in excess of the amount returned with interest, necessary to discharge the liabilities of the Partnership to all creditors who extended credit or whose claims arose before the return of the contribution. The limitation of liability of a Limited Partner may be lost if a Limited Partner takes part in the control of the business of the Partnership.
Other than with respect to the possible loss of the limited liability as outlined above, no Limited Partner shall be obligated to pay any additional assessment on the fund units held or subscribed. However, if, as a result of a distribution by the Partnership, the Partnership’s capital is reduced and the Partnership is unable to pay its debts as they become due, the Limited Partners may have to return to the Partnership any such distributions received by them to restore the capital of the Partnership. If the Partnership does not have sufficient funds to meet its requirements and must default because the deficiency is not funded, Limited Partners may lose their entire investment in the Partnership.
The Partnership may at any time incur losses resulting in substantial redemptions by limited partners. Substantial redemptions of units in our fund could require the Partnership to liquidate positions more rapidly than otherwise desirable to raise the necessary cash to fund redemptions and achieve a market position appropriately reflecting a smaller asset base. There is a risk that if the Partnership’s assets become depleted the Partnership’s portfolio could become sufficiently restricted to make it difficult to achieve the Partnership’s investment objective. Such factors could adversely affect the value of the Units redeemed and of the Units remaining outstanding.
Legal, tax and regulatory changes may occur that can adversely affect the Partnership and Limited Partners. There can be no assurance that income tax, sales tax, securities and other laws will not be changed or administered in a manner which adversely affects the business and affairs of the Partnership or the Limited Partners.
The COVID-19 outbreak was characterized as a pandemic by the World Health Organization in March 2020. The outbreak has spread throughout the globe, causing companies and various governments to impose restrictions, such as quarantines, closures, cancellations, and travel restrictions. The effects of COVID-19 and the measures taken by companies and governments to combat the coronavirus have negatively affected asset values and increased volatility in the financial markets, including the market price and volatility of the fund assets. The extent to which the coronavirus may impact, or may continue to impact, the market price of the trust assets and, in turn, the market price of the units, is uncertain and cannot be predicted. The COVID-19 outbreak may lead to disruptions of normal business activity and a sustained outbreak may have a negative impact on the fund and its financial performance. Business continuity policies are in place, and we are developing additional strategies to address potential disruptions in its operations. However, no assurance can be made that such strategies will successfully mitigate the adverse impacts related to the COVID-19 outbreak. COVID-19 could adversely impact the health of our employees, prime brokers, counterparties, and other stakeholders. The full extent of the duration and impact that COVID-19, including any regulatory responses to the outbreak, will have on the Canadian and global economies and our business is highly uncertain and difficult to predict at this time.
Russian President Vladimir Putin ordered the Russian military to invade Ukraine in February 2022. In response, numerous countries around the world imposed further sanctions designed to target the Russian financial system. Russia’s invasion of Ukraine, the resulting displacement of persons and the increase in international sanctions could each have a negative impact on the economy and business activity globally, and therefore could adversely affect the performance of assets in the fun. As result of the evolving nature of the conflict and its ongoing escalation it is difficult to predict the conflict’s ultimate impact on global economic, business and market conditions. The conflict may present material uncertainty and risk with respect to the assets of the fund and the performance of their investments or operations, and the ability of investments to achieve their objectives.
The information contained on this website is confidential, it is intended only for the person to whom access has been granted and it may not be published, distributed, or reproduced for any purpose without written permission from K2.
The content of this website is for information only and does not constitute an offer to sell or a solicitation of an offer to buy any security in any jurisdiction to any person, nor does it constitute a financial promotion, tax advice, legal advice, investment advice, or an inducement or incitement to participate in any product, offering, or investment. The content of this website should not be relied upon in making an investment or other decision.
K2 or its officers, directors, employees, shareholders or members do not guarantee the performance of any investment, any rate of return or any return of capital invested. Products and services of K2 are only offered in jurisdictions where they may be lawfully offered for sale.
This website may contain forward-looking statements. All statements, other than statements of historical fact, that address activities, events or developments that K2 expects or anticipates will or may occur in the future (including, without limitation, statements regarding any objectives and strategies of a fund or account) are forward-looking statements. These forward-looking statements reflect the current expectations, assumptions or beliefs of K2 based on information currently available. Forward-looking statements are subject to several risks and uncertainties that may cause actual results to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences or effects.
Past performance should not be seen as a guide to the future. Unaudited figures are based on estimates and may be subject to material change. Unless otherwise noted, information is presented as of the date of this document and K2 assumes no duty to and does not undertake to update any of the information contained in this document after the date of this document. The investment and risk management processes of K2 may evolve over time or due to market conditions, and the descriptions of such processes only reflect K2’s expected process as of the date of this document.
This website does not contain a complete description of the funds managed by K2 or the risks associated with an investment therein and is subject to and qualified in its entirety by reference to the applicable Relationship Disclosure Information, including offering documents and Statement on Conflict of Interests. Potential investors should carefully review the Offering Documents, which contain important information concerning the Funds and the risks associated with an investment, including the potential loss of the investment and any potential legal or tax risks. Any person investing in a Fund must be able to bear the risks involved and must meet the eligibility requirements relating to such an investment. Commissions, management fees, carried interest allocations, other charges and expenses all may be associated with investing in the Funds. Some or all alternative investment programs may not be suitable for certain investors. Investors in a Fund may lose all or a significant portion of their investment. No assurance can be given that a Fund’s investment objectives will be achieved.
Certain economic and market information in this document has been obtained from published sources and/or prepared by third parties and, although believed to be reliable, has not been independently verified. Neither K2 nor its directors, officers, employees and representatives, nor any of their affiliates, make any representation, accept any liability or loss, or assume any responsibility, relating to such information, including as to its accuracy, reliability, or completeness.