One Rulebook, Four Statutes

Nothing in this paper constitutes an offer to sell, or a solicitation of an offer to buy, any interest in a Woodfine direct-hold solution; any offering is made only by the applicable Private Placement Memorandum. Statements marked "planned," "intended," "targeted," "may," or "expected" are forward-looking and subject to change. Full disclosures appear at the end of this paper.

Working Paper WCP-016 · v0.1.0 · CC BY 4.0

Our thesis is that the right way to run the same investment in four countries is to stop trying to run the same vehicle in four countries. Each of the four has its own long-established legal form for holding income property on behalf of investors, each of those forms is familiar to the local regulator, the local tax authority, local counsel and local investors, and each already works. What we lay on top of them, identically in each country, is the rulebook: one set of governing provisions — the Universal Governing Bylaws — written into whatever instrument that country's form uses, whether that is a partnership agreement, corporate bylaws or a trust deed.

The result is intended to be approximately the same investor protections in Canada, the United States, Spain and Mexico, without anybody having invented a new kind of legal entity. The word doing the real work in that sentence is approximately, and this paper exists to say precisely where the approximation holds and where it breaks. The places where it breaks have a name in this company's own vocabulary — the Jurisdictional Fracture — and they are not a caveat appended at the end. They are the content. Section 4 names each one specifically, because a reader comparing the same investment offered through two different national vehicles is entitled to know exactly which rights are identical and which are not.

One honest framing note before the argument. Of the four vehicles, one exists: the Canadian limited partnership. The United States, Spain and Mexico vehicles are planned and not yet formed, which means their governing instruments have not been written. So the uniformity claimed here is at this stage a design intention verified against three countries' statutes, not a comparison of four real documents that anybody can read side by side. That is a meaningful limitation on the claim and it recurs throughout.

1. The thesis

The same core protections sit on top of four different national legal forms, each of which keeps its own country's familiar shape. What makes that a claim rather than a platitude is that the protections are specific, they are written into the governing instrument rather than described in marketing material, and several of them are placed beyond the reach of a later amendment.

Our position is that this is strictly better than the alternative it replaces. The alternative is to design one bespoke, jurisdiction-spanning structure and then persuade four countries to accommodate it. That approach produces an entity nobody locally recognises: a tax authority that has to decide what it is, a regulator with no precedent to apply to it, local counsel who cannot advise on it without qualification, and an investor who cannot compare it to anything they have seen before. Every one of those is a cost, and none of them buys the investor anything.

The reason the rulebook can travel while the entity cannot is that the two do different work. What a country's statute fixes is the form — who holds title, who governs, what the instrument is called, whether it must be listed, how the tax flows. What a contract can fix is the conduct — what the money may be invested in, what may be charged, what must be distributed, who has to agree before the rules change. The second list is where almost all of an investor's real protection lives, and it is portable. The first list is not portable, and pretending otherwise is the mistake this design is built to avoid.

2. The problem, in the reader's terms

Some vocabulary first, because none of it is obvious and all of it is load-bearing.

A governing instrument is the contract that sets out how a pooled investment actually operates: what it may buy, who runs it, what they may be paid, what has to be distributed, and how any of that can be changed. Its name changes by country and by form — a partnership agreement, a company's bylaws, a trust deed — and the name matters less than the fact that it is the document a court would read if there were ever a dispute. It is the rulebook, and an investor's real protections live in it rather than in a brochure.

A flow-through vehicle is one that is not taxed on its own income; the income passes through to the investors, who are taxed once, on their own account. Without it, income earned by a property is taxed at the entity and taxed again when it reaches the investor — the same money taxed twice. Every serious country has invented at least one such form for real estate, and the forms have different names and different conditions attached: a limited partnership in Canada and the United States, a SOCIMI in Spain, a FIBRA in Mexico.

A general partner is the entity that manages a limited partnership and bears its liabilities; the limited partners put up capital, take the income, and are barred from participating in management, which is the price of their limited liability. An Administrator is the rough equivalent role under Spanish and Mexican forms, and "rough" is doing some work in that sentence, as Section 4 explains.

Now the shape of the problem. A company operating in several countries does not invent a single global corporate entity and ask each country to recognise it. It incorporates a local subsidiary in each country, in that country's own standard form, and then imposes its own group policies on all of them — the same code of conduct, the same approval limits, the same reporting. The local form is whatever the local statute provides. The policy is the company's own, and it is the same everywhere. That is exactly the division of labour here, applied to an investment vehicle rather than an operating subsidiary.

A count that is easy to confuse, so it is worth separating now. This paper is about four national investment vehicles: Canada, the United States, Spain, Mexico. A reader who works through this company's other material will also meet a different number — nine planned development jurisdictions, which adds Poland, the United Kingdom, Italy, the Nordics and a grouping described as New Europe to the four above. Those nine are where buildings are planned to be developed. The four are where investment vehicles are planned to be constituted. They are not the same list, they are not the same kind of thing, and neither number is a revision of the other.

3. What the Universal Governing Bylaws actually contain

A framework of protective clauses is a phrase that means nothing until the clauses are named. The following are the provisions of the established Canada vehicle's own governing agreement, and they are the model intended to be reproduced in the other three instruments as each vehicle is formed. Where a provision is specific to Canada today, that is said.

Capital may only go into a defined category of investment. The agreement does not authorise the vehicle to buy property generally. It confines capital to a Qualified Investment: a defined category tied to one or more contiguous parcels supporting a professional centre in a regional market, adjacent to major national retailers. An investor is therefore not subscribing to a manager's general judgement about real estate; they are subscribing to a narrow mandate that the manager cannot unilaterally widen.

Interest cannot be capitalised. Capitalising interest means adding the interest owed during construction to the loan's principal instead of paying it as it accrues. It is legal, common, and it has one consistent effect: debt grows while the cost stays out of current income. The agreement prohibits it, so interest appears as a cost in the period it is incurred.

No fee may be calculated by reference to net asset value. The agreement prohibits the partnership from paying any person any fee, reward or inducement calculated by reference to the net asset value of its assets, or to a change in that value. It also restricts who may charge the partnership at all: apart from the retained advisor's fees, no subsidiary or affiliate of the promoter is entitled to receive fees from the partnership. Another of our papers is entirely about why the base a fee is calculated on matters more than the rate; this is the clause that puts it beyond the reach of a later fee redesign. It is, today, a term of the Canadian agreement, and the other three instruments are not yet written.

Changing the rules needs a supermajority, and some rules cannot be changed at all. An amendment requires a special resolution — seventy-five per cent of votes cast at a properly constituted meeting, or the written consent of holders of seventy-five per cent of all outstanding units. That threshold sits well above a simple majority, so an amendment requires broad consensus rather than a plurality of whoever turns up. More importantly, a defined list of changes sits outside what any vote can reach: no amendment may reduce any limited partner's interest, change a partner's voting rights or liability, change how income, loss and tax attributes are allocated between the partners, deny or reduce a tax deduction a partner would otherwise have, or reduce or eliminate the partnership's obligation to issue the escrowed promoter equity. Amending the amendment clause itself requires unanimity. A protection that a supermajority can delete is worth less than one it cannot, and the distinction between the two lists is the most underrated provision in this rulebook.

Existing equity holders get first refusal on the vehicle's own debt. When the vehicle issues its own mortgage debentures to fund the next construction phase, existing equity investors have a right of first refusal — the chance to buy into that debt before it is offered outside. The same investor can hold both halves of the same buildings' capital structure if they want to.

Income has to be distributed, not retained at discretion. Where a distribution is declared, at least ninety per cent of the fiscal year's distributable income is paid to limited partners within ninety days of the year end. Until cumulative distributions equal the whole of what limited partners paid for their units, the remaining tenth is retained for partnership purposes; after that, it is applied to redeeming debentures until they are fully redeemed. There is no preferred class, no hurdle to clear before ordinary units participate, and no accumulated preferred entitlement — all units of the same asset receive the same amount each.

New borrowing is gated on income already earned. Further debentures may not be issued if doing so would take the vehicle's interest coverage below 1.20 times, measured across the vehicle as a whole, absent a special resolution. The financing sequence this belongs to is the subject of another of our papers.

Developer profit sits behind investor capital. The promoter's equity is issued as compensation rather than subscribed for at the price limited partners paid, and it is held in escrow. Voting rights are retained throughout, but the units do not become freely disposable until limited partners have recovered one hundred per cent of their contributed capital, or another defined liquidity event occurs.

Governance is majority-independent by contract. In Canada, the general partner is bound by a unanimous shareholder agreement requiring a majority of its board to be arm's-length, independent directors. The planned Mexican Administrator carries the same intention, with a majority of its own board intended to be independent directors dealing at arm's length with the group, the promoter and the advisor.

One plain statement to close this section rather than to qualify it. Every provision above is a term of one agreement governing one vehicle. The uniformity across four is a design intention. When the other three instruments are written, a reader will be able to check it, and until then the honest description is that three of four are planned.

4. Where the Jurisdictional Fracture actually shows up

This is the part of the paper that is worth a reader's time, because it is where the uniform story stops being uniform. Each fracture below is specific and checkable against the relevant country's own statute, and none of them is a drafting problem that better lawyers would solve. They are places where a national statute simply requires something different.

The vocabulary itself does not travel. "Public but not listed" is a real, ordinary status in Canada and the United States: a vehicle can be a reporting issuer, with all the filing obligations that carries, without any of its units trading on an exchange. That combination is what both of those vehicles are designed around. Spanish market terminology draws the line differently. Cotizada — listed — is the legal definition of being a public company, and there is no separate category for a public-but-unlisted issuer at all. So the single phrase that describes the whole design in two of the four countries describes nothing in the third. This is the fracture the name was coined for, and it is a fracture in language that turns out to be a fracture in law.

Spain's tax status is conditional on listing, and there is no unlisted path to it. A SOCIMI's exemption from Spanish corporate income tax on qualifying rental income and gains depends on meeting asset, income and distribution tests and on maintaining a listing on a regulated market. The planned answer is a technical listing — admission sufficient to satisfy the legal requirement, without pursuing the trading volume of a fully liquid public market — with settlement through Iberclear and continuous disclosure filed with Spain's securities regulator [cnmv]. It is a real and reasonable answer. It is not the same position as the other three vehicles occupy, and a Spanish holder's units would be admitted to an exchange and subject to electronic matching in a way a Canadian holder's units are not. Anyone who prefers the unlisted position cannot have it in Spain at any price.

Mexico requires a bank to hold the title, and the group cannot hold that role. A FIBRA must have a licensed Mexican banking institution as its fiduciario — its trustee — and that bank holds legal title. This is statutory, not a structuring choice. The planned design puts a Technical Committee in place to instruct the bank on development, leasing and fee decisions, with the bank mandated to follow those instructions rather than exercise its own discretion over the real-estate business. That is a sensible arrangement and it is not the same governance shape as a general partner that both governs and is bound to investors by a partnership agreement. An investor comparing the two is comparing a vehicle whose governing entity is a group subsidiary with a vehicle in which a third-party bank holds legal title and takes instructions. Both are defensible. They are not the same thing, and the difference is not one the Bylaws can erase.

The transfer mechanism is not the same mechanism. In Canada and the planned United States vehicle, the governing entity records a transfer once the transferee completes the required transfer documentation — a ministerial step, not an approval, which is the subject of another of our papers and is not restated here. In Spain and Mexico, eligibility is enforced directly at the depositary or register, with no governing-entity step at all. The outcome is similar — a holder does not need discretionary permission to sell — and the machinery is different, which matters the moment something goes wrong, because a holder's counterparty in a dispute would be a different institution in each case.

The kind of price a holder can see is different in each country. This is the fracture most likely to surprise someone comparing two of these vehicles. A Canadian holder has no published quote at all: units are not listed, they transfer over the counter at a bilaterally agreed price, and the reference points are appraisals rather than trades. A Spanish holder, on a technical listing, has an exchange price, produced by electronic matching on a market deliberately not pursued for liquidity — which may be a thin price rather than an informative one. A Mexican holder of a Private FIBRA's certificates sees something different again: public market data for such a vehicle shows volume as zero and price as not applicable, because there is no listed quote to report, and in its place the certificates carry a Reference Value anchored to the trust's net asset value, published daily to the central depository by a certified pricing vendor on the basis of periodic independent property appraisals. Three holders of what is presented as the same investment therefore read three different kinds of number when they ask what their holding is worth: no number, a thin market number, and a daily appraisal-derived number. None of them is wrong. They are not comparable, and a reader should not treat them as comparable.

There is a related point that deserves care rather than a slogan. The Canadian agreement prohibits any fee calculated by reference to net asset value, while the Mexican design has a net-asset-value figure published daily by statutory design. Those are compatible — one governs what may be charged, the other governs how a certificate is priced — and we are not going to pretend they conflict. But a reader who has absorbed the argument against net-asset-value dependence should know that in one of the four jurisdictions a net-asset-value figure sits at the centre of the instrument's own pricing machinery, and should ask what the equivalent fee prohibition looks like in the Mexican trust deed when it is written. We cannot answer that today, because it is not written.

Local statute binds the business, not only the paperwork. Mexico's fiscal transparency under Article 188 of its income tax law carries conditions on what the trust actually does: a property the trust develops is intended to be held for lease for at least four years after completion rather than sold, and at least seventy per cent of trust assets are intended to be invested in real estate destined for lease. Spain's SOCIMI exemption similarly depends on asset, income and distribution tests as well as the listing. These are not documentary formalities. They constrain disposal decisions and portfolio composition, and they are not identical across the four, which means the same investment discipline is bounded differently in each country by something the Bylaws did not choose.

And the instrument is a different kind of thing in each place. In Canada and the United States, a holder owns units of a limited partnership. In Spain, shares of a listed company. In Mexico, trust participation certificates — a beneficial interest in a trust whose legal title to the property sits with a bank, through subsidiaries that each hold one site. Those are different legal characters with different remedies, different insolvency treatment and different tax analysis for the holder, not four labels for one thing. The economic and governance design is intended to be functionally equivalent. The legal character is not equivalent and cannot be made so.

One fracture we cannot yet report on properly, and would rather name than skip: the comparative minimum distribution floors. The at-least-ninety-per-cent rule described in Section 3 is the Canadian agreement's. Spain's and Mexico's flow-through regimes each impose their own statutory distribution requirements, and their interaction with the Bylaws' own floor is exactly the kind of place a fracture would appear — a statutory floor above the contractual one would override it, one below it would leave the contractual one binding. Only Canada's figure is published today. Anyone comparing two of these vehicles on distribution policy should ask for both numbers rather than assume the Canadian one travels.

What this changes for the reader

The first change is a specific list of questions to ask about any investment offered through more than one national vehicle. Is the instrument the same kind of legal thing in each country — a share, a partnership unit, a trust certificate? Who holds legal title to the property, and is that a party the sponsor controls? Is the vehicle required to be listed anywhere, and if so why? What price can I actually see, and what produces it? And which of the protections I am being shown are in the local instrument rather than in a group-level description of the programme? Those five answers will usually reveal more about a cross-border structure than its summary table does.

The second is a caution against the summary table itself, including ours. A comparison chart showing the same tick in four columns is answering the question "is the intention the same." It is not answering "is my legal position the same," and for this structure the honest answer to the second question is: approximately, with the named exceptions above. A reader who takes the list of fractures out of this paper and asks about each one by name is doing exactly what we would want a reader to do.

The third is a straightforward practical point about where to look. Each vehicle's continuous disclosure is filed with its own country's regulator on its own system — Canada's on SEDAR+ [sedar-plus], the United States' on EDGAR, Spain's with the CNMV [cnmv], Mexico's with the CNBV [cnbv]. There is no single consolidated place where all four records sit, and there is not going to be one, because each regulator maintains its own. An investor holding two of these vehicles would be reading two filing records in two languages under two disclosure regimes.

The trade-offs belong together. Using four familiar local forms means accepting four different legal characters for the holder's instrument, which is a real cost that a bespoke single vehicle would have avoided — at the price of being unrecognisable everywhere. The Bylaws can constrain conduct but cannot override statute, so the fractures above are permanent features rather than work in progress. Three of the four vehicles do not exist, so three-quarters of the uniformity claim is currently an intention. And the vehicle that does exist is subject to an active cease-trade order issued by the British Columbia Securities Commission, arising from delayed continuous-disclosure filings rather than any finding of fraud or misconduct, and must bring its filings current and obtain the Commission's revocation before any future offering of its units can close — which is a reminder that a well-drafted rulebook and a well-kept filing record are separate accomplishments.

An open invitation

The questions this paper leaves open are for comparative lawyers rather than for developers.

To comparative securities-law researchers: the interesting question is whether a fifth jurisdiction could be added while preserving this degree of near-uniformity, or whether four is close to the practical limit of the approach. Our own suspicion is that the binding constraint is not the number of countries but the diversity of their flow-through forms: the four in place already span a partnership, a listed company and a trust, which is most of the available design space, and a fifth might add nothing new or might break something we have not anticipated. Nobody inside a company is well placed to judge that about their own structure.

To researchers on the relationship between contract and statute in investor protection: the design assumption here is that the protections worth having are mostly contractual and therefore portable, while the things statute fixes are mostly form. We think that is right and we know it is not obviously right. There is a plausible opposing view — that statutory protections are the ones that actually get enforced, because a regulator enforces them without an investor having to sue, and that a contractual protection is only as good as a minority holder's willingness to litigate. If that view is correct, a structure that maximises contractual protection and accepts statutory variation has optimised the less useful half. That is a serious objection and we would rather see it argued than ignore it.

To Mexican and Spanish counsel specifically: the two fractures we are least confident about are the ones we can least check from here. In Mexico, what the practical limits are on a Technical Committee's ability to instruct a bank fiduciary when the two disagree, and what a certificate holder's remedy actually is in that situation. In Spain, whether a technical listing pursued to satisfy a statutory requirement carries obligations or exposures — market-abuse, disclosure, price-formation — that a lightly traded admission does not obviously avoid. Both are questions where being told we are wrong now is worth a great deal more than discovering it later.

To anyone who has drafted an equivalent multi-jurisdiction rulebook: the provision we are most attached to is the list of matters that no supermajority vote can amend, because a protection a vote can delete is a weaker protection than it appears. If there is a jurisdiction where such a list is unenforceable, or a mechanism that achieves the same result more robustly, that is the most useful thing anyone could tell us.

Conclusion

One rulebook, applied four ways, fracturing in named places — that is the honest description of this structure, and the fracture list is the part a reader can use. The portable half is real: capital confined to a defined mandate, no capitalised interest, no fee calculated on net asset value, a supermajority to change the rules with a defined set of changes no vote can reach, a right of first refusal on the vehicle's own debt, a distribution floor, and developer profit held behind investor capital. The unportable half is equally real: Spain must be listed and has no category for anything else, Mexico's title must sit with a bank and its property must be held for lease for years, the transfer machinery differs, the instrument is a different legal creature in each country, and the kind of price a holder can see differs in all three ways. One vehicle of the four exists. The other three are planned, their instruments are unwritten, and the uniformity is therefore an intention rather than something a reader can yet verify. Naming the fractures is the part of the claim we can stand behind today.

References

Canadian Securities Administrators. National Instrument 51-102 — Continuous Disclosure Obligations. https://www.bcsc.bc.ca/securities-law/law-and-policy/instruments-and-policies/5-ongoing-requirements-for-issuers-insiders/current/51-102

Canadian Securities Administrators. SEDAR+ — the filing and public disclosure system for Canadian securities. https://www.sedarplus.ca/

Comisión Nacional del Mercado de Valores. Spain's securities market regulator. https://www.cnmv.es/

Comisión Nacional Bancaria y de Valores. Mexico's banking and securities regulator. https://www.gob.mx/cnbv

Contributors

Prepared by Woodfine Management Corp.

How this paper was produced

This paper is grounded in the operating and development work the preparing staff do themselves, and in what they have learned from the people they work with routinely: the graphic designers, web developers, and software developers and engineers who build the platform alongside them, and the architects and structural, building-services, and civil engineers they develop buildings with. No outside professional reviewed or approved this paper, and nothing in it is professional advice. It was drafted and edited with AI assistance under editorial direction, and the analysis and conclusions are Woodfine's own.

Disclosures

Woodfine Capital Projects Inc. ("Woodfine") is the author of record and is the promoter of all four vehicles described in this paper; Woodfine Management Corp. employs the staff and retains the consultants who prepared this material. Woodfine has a direct commercial interest in the structure argued for here. This work was funded internally; no external research funding was received. Nothing in this paper constitutes an offer to sell, or a solicitation of an offer to buy, any interest in a Woodfine direct-hold solution; any offering is made only by the applicable Private Placement Memorandum, which prospective investors should review with their own professional advisors. Only Professional Centres Canada LP is established; the United States, Spain and Mexico vehicles are planned and not yet formed, no governing instrument has been executed for any of them, no units or certificates in them exist, and no capital has been raised for them. Professional Centres Canada LP is currently subject to a cease-trade order issued by the British Columbia Securities Commission, arising from delayed continuous-disclosure filings rather than any finding of fraud or misconduct; it must bring its outstanding filing obligations current and obtain the Commission's revocation before any future offering of units can close. The provisions described in section 3 are terms of that partnership's own governing agreement, summarised in plain language; that agreement, and not this paper, governs. This paper's descriptions of Spanish, Mexican and United States law are plain-language summaries prepared for a general reader, are not legal advice, and are not a substitute for advice from counsel qualified in the relevant jurisdiction. Some statements above describe planned or intended future structures; language such as "planned," "intended," "targeted," "may," and "expected" marks this forward-looking content, which is subject to change and does not constitute a commitment regarding future performance. This paper states no projected rate of return, distribution yield, or investment performance figure for any vehicle, and none should be inferred from it.

Data and reproducibility

Nothing here is measured. The paper contains contractual terms, statutory descriptions, and statements that something does not yet exist.

The provisions in section 3 — the Qualified Investment mandate, the prohibition on capitalised interest, the prohibition on any fee calculated by reference to net asset value and the restriction on affiliate fees, the seventy-five per cent special-resolution threshold and the enumerated matters no resolution can amend, the right of first refusal on the vehicle's own debentures, the at-least-ninety-per-cent distribution rule and its ninety-day timing, the 1.20-times coverage gate on new borrowing, the escrowed promoter equity and its capital-recovery release condition, and the majority-independent board requirement — are terms of the established Canada vehicle's governing agreement and associated shareholder agreement. They are commitments, not observations, and they are that vehicle's terms. They are described here as the model intended for the other three instruments, which have not been written. A reader relying on any of them should read the agreement.

The statutory descriptions — Spain's listing condition for SOCIMI tax status and the absence of a public-but-unlisted category in Spanish terminology; Mexico's requirement that a licensed banking institution act as trustee, the Article 188 four-year hold-for-lease and seventy-per-cent asset-composition conditions, and Private FIBRA reference-value pricing published daily to the central depository; and the depositary-level enforcement of eligibility in Spain and Mexico — are summaries of the relevant countries' own statutes and regulations, published in full by those countries' authorities. Those texts govern over this paper's account of them, and a reader acting on any of these points should obtain local advice. The technical-listing plan for Spain, the Technical Committee arrangement in Mexico, and the subsidiary structure holding each Mexican site are planned designs, not arrangements in place: no Spanish or Mexican entity has been formed, no bank has been engaged as fiduciary, and no Technical Committee members have been named.

One comparison this paper could not complete is stated rather than smoothed over: the statutory minimum distribution requirements of the Spanish and Mexican regimes are not set out here alongside the Canadian contractual floor, because only the Canadian figure is published in the company's own disclosure. A reader comparing distribution policy across two of these vehicles should obtain both figures rather than assume the Canadian one applies.

The four investment vehicles described here are a different count from the nine planned development jurisdictions that appear in this company's development material, and neither number supersedes the other. No independent party has verified this paper's account of the Canadian agreement, or its summaries of Spanish, Mexican or United States law.

Woodfine Capital Projects™ is a trademark of Woodfine Capital Projects Inc.