Securities act update
National Instrument 31-103, now almost a year old, has several provisions that take effect in the next month or two after a long transition period. Many will have a serious impact on companies in the sector.
Capital requirements: September 27, 2010
All firms, other than Investment Industry Regulatory Organization of Canada (IIROC) and Mutual Fund Dealers Association (MFDA) members, registered prior to September 2009 and continuing to be registered must comply with the new capital requirements under Part 12 of NI 31-103. If registered in more than one category, the firm must satisfy the highest capital requirement of its categories.
Relationship disclosure information requirements – September 27, 2010
Registered firms, other than IIROC and MFDA members, must comply with the new relationship disclosure information requirements under Part 14 of NI 31-103, which includes providing clients with all information a reasonable investor would consider important about the client’s relationship with the registrant.
Proficiency requirements – September 27, 2010
Transitional relief for individuals registered as of December 28, 2009 as a firm’s chief compliance officer must meet the applicable proficiency requirements in Part 3 of NI 31-103 by no later than this date. Quebec’s derivatives legislation contains additional proficiency requirements. Industry participants engaged in derivatives trading or advisory activities in Quebec and subject to registration under the Quebec Derivatives Act must also pass the IIROC required examinations and meet prescribed derivatives experience requirements. As registration under the Quebec Derivatives Act does not fall within the registration passport system, application must be made to the Autorité des marchés financiers (AMF), and only the AMF can determine whether a person meets the requirements.
Registration as investment fund manager, exempt market dealer and portfolio
manager – September 28, 2010
Persons or firms with a head office in Canada that are acting as an investment fund manager must register in the province or territory where the head office is. Persons or companies that were acting as a dealer in the exempt market must register as an exempt market dealer in the province or territory in order to continue to deal in the exempt market.
Non-Canadian advisers formerly registered as an international adviser in Ontario, portfolio manager and investment counsel (foreign) in Alberta, portfolio manager and investment counsel (foreign) in British Columbia, or investment counsel (international adviser) in Manitoba and now ‘mapped over’ to registration in the category of portfolio manager on a one-year transitional basis must either: (i) register as a portfolio manager in the jurisdiction, or (ii) file the appropriate forms and comply with the applicable conditions for reliance on the international adviser exemption under Part 8 of NI 31-103.
All information sourced from Stikeman Elliot