On December 16, 2021, the Canadian Securities Administrators (CSA) introduced amendments to National Instrument 33-109 Registration Information and National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations as well as their respective companion policies (the Amendments). The Amendments seek to modernize registration information requirements, clarify outside activity reporting, update filing deadlines, and address issues and concerns raised by CSA staff and registrants.
The purpose of these Amendments is to reduce the regulatory burden on registrants while allowing the regulators to receive complete and accurate information. The Amendments are not intended to change the nature of the registration process, the requirement to register, or the assessment of fitness for registration.
The Amendments will come into force on June 6, 2022. Registrants are required to update their information in light of the Amendments on the earliest of (i) a change in the registrant’s registration information previously provided, or (ii) June 6, 2023.
The Amendments can be found in full on the Ontario Securities Commission’s website.
The Amendments introduce a new reporting framework for activities carried on by individual registrants outside of their sponsoring firms (Outside Activities) (previously referred to as outside business activities), which requires registered firms to identify and address material conflicts of interest arising from Outside Activities. Outside Activities are reportable if they fall within one of the following five categories:
The deadline for a registered firm to provide an individual registrant with a copy of Form 33-109F1 Notice of End of Individual Registration or Permitted Individual Status has been extended from 10 days to 15 days. Additionally, the deadline to report becoming a permitted individual or ceasing to be an individual registrant has been extended from 10 days to 15 days. The deadline for reporting Outside Activities or changes in Outside Activities has been extended from 10 days to 30 days.
The Amendments introduce a mechanism whereby a registered firm can delegate another firm to notify the applicable regulator of changes in certain registration information. Additionally, there is no longer a requirement that the firm registration form be witnessed. The Amendments also eliminate the requirement for reporting changes in percentage ownership if the change did not result in the percentage ownership falling below or exceeding 10%, 20%, or 50%. The Amendments also remove the requirement to report a change in the expiry date of a registered firm’s insurance policy where the policy has not lapsed and there have been no changes to the policy. The Amendments also provide additional guidance on changes in litigation to be reported.
The Amendments have modified the information registrants are required to provide during the registration process. For example, the following information must be disclosed:
The Amendments introduce a requirement to report the business titles and professional designations that individual registrants use or will use once registered. The purpose of this requirement is to implement the CSA’s oversight for the new prohibition, in NI 31-103 introduced as part of the Client Focused Reforms, on registrants holding out their services in a way that could deceive or mislead as to their proficiency, experience or qualifications; their relationship with the registrant; or the products or services provided.
- New reporting framework for Outside Activities
- Activities with another registered firm;
- Activities with an entity that receives compensation from a registered firm for the activities that the individual provides to the sponsoring firm or another registered firm;
- Other securities-related activities, where an individual at any time in the last seven years has been directly involved in raising money for an entity through the issuance of securities or derivatives or promoting the sale of securities or derivatives outside of activities with a registered firm.
- Provision of financial or finance-related services, including negotiating or selling insurance, loan or banking services, carrying on a money service business, preparing tax returns, or lending money.
- Positions of influence, e.g., medical doctor or religious leader.
- Extending deadlines to report changes in registration information
- Modifying and clarifying certain registration information to adjust the burden of collection
- Amending registration information requirements to provide greater clarity and reduce errors
- Allegations of non-compliance with the firm’s policies and procedures;
- Non-compliance with securities law;
- Criminal offences under foreign law;
- Bankruptcy and insolvency events, no matter how long ago the bankruptcy occurred; and
- All non-securities licences that involve dealing with the public.
- New requirement to report the business titles and professional designations used by individual registrants
Other key changes set out in the Amendments include:
- A reduction in multiple filings of the same information by corporate groups;
- A clarification that Form 33-109F7 may only be used if the individual’s registration information was up-to-date when the individual ceased to be a registered or permitted individual; and
- Amendments and updates to various registration forms.