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).

New Rules for Portfolio Managers

NI 31-103 recasts adviser registration in Canada, collapsing previous categories of adviser registration into a single category called portfolio manager (PM) and introducing a new category of restricted portfolio manager (Restricted PM). There are new capital and proficiency requirements, new individual registration categories and other important changes.

Did You Know?

  • Some of the new requirements will be phased in under transition rules, some changes require immediate action and some will not apply to those who are registered at the effective date.
  • In particular, firms in Ontario have until September 28, 2009 to apply to upgrade an associate advising representative to advising representative without having to satisfy the new proficiency requirements.

These and other important changes in the regulation of the registered advisers under NI 31-103 are discussed below in this issue.

We can help you navigate your way.

Transition Requirements

Firms that are currently registered as an “investment counsel”, “portfolio manager”, “portfolio manager/investment counsel” or “unrestricted practice adviser” will be automatically registered in the new PM category. You don’t have to apply.

For individuals registered before the effective date, individuals currently registered (and in each case who remain registered) as an advising representative of a portfolio manager, an associate advising representative of a portfolio manager, an advising representative with terms and conditions on that registration that are equivalent to the scope of authority of an associate advising representative under NI 31-103, will not be required to satisfy the new proficiency requirements.

Individuals designated on the National Registration Database as CCOs upon the effective date will not be required to satisfy the new proficiency requirements.

Currently in Ontario, an associate advising representative can apply to upgrade to become an advising representative after three years with no requirement for additional course work. That is no longer the case under NI 31-103. Under the new rules, if an individual is an associate advising representative in Ontario on September 28, 2009, that individual will need to meet the new proficiency criteria in order to become an advising representative. For any associate advising representative who currently has more than three years’ experience, it will be beneficial to apply to upgrade that individual to advising representative prior to September 28, 2009 to avoid the additional course work that will be required if upgrading is sought later.

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.