On July 17, 2009, the Canadian Securities Administrators (the CSA) published in final form their reforms to the registration regime in National Instrument 31-103 – Registration Requirements and Exemptions (NI 31-103), along with certain consequential amendments to other securities laws (collectively, the new rules). Subject to ministerial approval requirements, NI 31-103 will come into force on September 28, 2009 (the effective date).
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- PMs will be required to provide a client with relationship disclosure information before advising the client.
These and other important changes in the regulation of registered advisers under NI 31-103 are discussed below in this issue.
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Relationship Disclosure Information
PMs must provide “relationship disclosure information” before the PM first advises the client. All information that a reasonable investor would consider important about the client’s relationship with the adviser must be disclosed. For example, relationship disclosure information would include a discussion that identifies which products or services are offered by the firm, a discussion of the types of risk a client should consider when making an investment decision, a description of the conflicts of interest that the adviser is required to disclose under securities legislation, and disclosure of all costs for the operation of an account. Relationship disclosure information is not required to be given to “permitted clients” who have provided a written waiver, but it is required in respect of a managed account for permitted clients.
Other Registration Reforms
NI 31-103 and the new rules include other significant changes to registration requirements for dealers, advisers and investment fund managers in Canada.