On June 4, amendments to National Instrument NI 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) that affect the custody of clients’ assets, including investment funds offered pursuant to prospectus exemptions, come into force. Unless an exemption is available, the new custody rules require registrants to ensure that a qualified custodian holds a nonprospectus investment fund’s or client account’s assets in a prescribed manner. In addition, registrants subject to the new rules must include disclosure about custody arrangements in the relationship disclosure information that they provide to their clients.
AUM Law can help you comply with the new rules effectively, e.g., by:
1. Reviewing your custody arrangements to determine whether your clients’ assets are being held by a “qualified custodian”, as needed;
2. Drafting or reviewing written agreements with qualified custodians to confirm that the cash and securities of the investment fund or managed account are held in the prescribed manner;
3. Updating your compliance manual to reflect the new custody rules;
4. Drafting or reviewing relationship disclosure documents to determine if they contain the new, prescribed disclosure relating to custody arrangements; and
5. Advising you on a program for periodic review of your custodial arrangements.