National Instrument

Transcription

1 Keeping Reforms in Sight: Understanding the New Canadian Registration Requirements AUGUST 2009 National Instrument At a Glance BLG S REGISTRANT REGULATION AND COMPLIANCE PRACTICE Our Registrant Regulation and Compliance Practice is the largest practice of its kind in Canada, with recognized experts in this field. We work with Canadian and international advisers (portfolio managers and investment counsel), fund managers and, including SRO members and exempt (limited) market. We act for the Investment Industry Regulatory Organization of Canada, the Mutual Fund s Association of Canada, the Investment Counsel Association of Canada and the Investment Industry Association of Canada, along with other industry trade associations, and have excellent working relationships with the Canadian securities regulators and other government officials. We provide a full range of legal services, including advice and assistance on becoming and continuing to be registered with the Canadian securities regulators and/or members of the SROs. Our services for our clients have included developing and designing, as well as reviewing and assessing, compliance procedures and practices relating to regulatory and internal policy requirements, assisting in building or strengthening compliance capability, conducting audits and investigations, identifying operational problems and devising appropriate solutions and responding to regulatory developments. We also provide advice on structuring investment funds and offerings of investment funds, including hedge funds, pursuant to private placements and public offerings within Canada to comply with Canadian securities laws. Please contact any of the following lawyers if you have any questions about National Instrument and its application to your business. TORONTO: Prema K.R. Thiele Laurie J. Cook Rebecca A. Cowdery Marsha P. Gerhart pthiele@blgcanada.com lcook@blgcanada.com rcowdery@blgcanada.com mgerhart@blgcanada.com VANCOUVER: CALGARY: MONTRÉAL: Jason J. Brooks H. Scott McEvoy Angie Redecopp François Brais jbrooks@blgcanada.com smcevoy@blgcanada.com aredecopp@blgcanada.com fbrais@blgcanada.com

2 D E A L E R S Dealing Representative Proficiency Fitness for Registration Client Relationships, Compliance, Internal Controls UDP and CCO Minimum Capital Financial Account Recordkeeping Compliance Complaint Proficiency and Insurance Reporting Opening and Reporting Systems Handling Investment IIROC Membership Business of trading in any securities and/or acting as underwriter of any securities Mutual Fund MFDA Membership Business of trading in mutual fund securities Set by IIROC CIFE, CSCE or IFICCE or advising rep (portfolio manager) proficiency partner. Set by IIROC CCO - Officer or partner with rep proficiency plus PDO Exam or MFDCE or CCO (portfolio manager) proficiency Set by IIROC Set by MFDA Set by IIROC Note: CSA/SROs to require all registrants to prepare financial accordance with IFRS as of January 1, 2011 Set by MFDA Note: CSA/SROs to require all registrants to prepare financial accordance with IFRS as of January 1, 2011 KYC, suitability and relationship disclosure set by IIROC Referral arrangements and client disclosure set by NI Suitability and relationship disclosure set by MFDA KYC set by NI Referral arrangements and client disclosure set by NI Accurately record business and demonstrate compliance Keep records for 7 years and in format so that they can be read by regulator Quarterly statements of account to clients monthly if account activity or on client request Trade confirmations set by IIROC but no monthly statements and trade confirmations set by MFDA System of controls and supervision: compliance with securities legislation and manage business risks Written policies and procedures Identify and respond to conflicts of interest Complaint handing procedures Dispute resolution or mediation services, and disclosure to clients Scholarship Plan Business of trading in scholarship plan securities RESPDAC sales rep exam partner with rep proficiency plus PDO Exam and RESPDAC Branch Manager Proficiency Exam Capital $50K Insurance based on formula with minimum of $50K per employee, agent and dealing representative or $200K (whichever is less) Annual audited and Form F1 within 90 days of year end and quarterly unaudited and Form F1 within 30 days of quarter end Note: CSA to require all registrants to prepare financial accordance with IFRS as of January 1, 2011 KYC, suitability and relationship disclosure Referral arrangements and client disclosure No suitability or relationship disclosure for permitted clients who waive requirements, with trade confirmations set by NI and annual (not quarterly) statements of account to clients Exempt Market Business of trading in prospectus exempt securities (including securities that are qualified under a prospectus, but could have been sold pursuant to exemptions) or acting as underwriter of prospectus exempt securities CSCE, EMPE or advising rep (portfolio manager) proficiency partner with rep proficiency plus PDO Exam or CCO (portfolio manager) proficiency as for scholarship plan Annual audited and Form F1 within 90 days of year end Note: CSA to require all registrants to prepare financial accordance with IFRS as of January 1, 2011 as for scholarship plan with trade confirmations set by NI N/A in British Columbia, Alberta, Manitoba and the territories for EMDs entitled to rely on local exemptions 2 3

3 ADVISERS (PORTFOLIO MANAGERS) AND INVESTMENT FUND MANAGERS Portfolio Manager Business of advising others in any securities Investment Fund Manager Acting as investment fund manager Advising Rep: (i) CFA and 12 months relevant investment management experience or (ii) CIM and 48 months of relevant investment management experience Associate Advising Rep: Level 1 of CFA or CIM and 24 months of experience N/A Advising Representative Proficiency partner, with (i) CFA, CA, CGA, CMA, Québec Notary or lawyer with CSCE and PDO Exam and 3 years specified experience or (ii) CSCE and PDO Exam and employed by (a) registrant (adviser or investment dealer) for 5 years, including 3 years in compliance or (b) employed by financial institution for 5 years in portfolio management compliance and 1 year by registered dealer or adviser or (iii) advising rep proficiency and PDO Exam Fitness for Registration partner with (i) CFA, CA, CGA, CMA, Québec Notary or lawyer with CSCE and PDO Exam and specified investment management experience (of either 3 or 4 years) or (ii) CIFE, CSCE or IFICCE, PDO Exam and 5 years experience with a registrant or an investment fund manager, including 3 consecutive years in compliance capacity or (iii) portfolio manager CCO proficiency Capital $25K Insurance $50K if not holding or access to client assets. If hold or have access to client assets, based on formula with minimum of $200K Capital $100K Insurance based on formula with a minimum of $200K Annual audited and Form F1 within 90 days of year end Note: CSA to require all registrants to prepare financial accordance with IFRS as of January 1, 2011 for scholarship plan, with annual and quarterly description of any NAV adjustments Note: CSA to require all registrants to prepare financial accordance with IFRS as of January 1, 2011 as for scholarship plan, but exemption allowing no provision of relationship disclosure to permitted clients who waive the requirements only applies if portfolio manager does not act as an adviser to permitted client s managed account None, other than in respect of referral arrangements and client disclosure Client Relationships, Compliance, Internal Controls UDP and CCO Minimum Capital Financial Account Recordkeeping Compliance Complaint Proficiency and Insurance Reporting Opening and Reporting Systems Handling, but no trade confirmations as for portfolio managers, but no required client reporting as for investment as for investment as for investment None 4 5

4 T R A N S I T I O N Fitness for Registration Client Relationships, Compliance, Internal Controls Rep. UDP and CCO Minimum Capital Financial Account Recordkeeping Compliance Complaint Proficiency Proficiency and Insurance Reporting Opening and Reporting Systems Handling Investment IIROC Member Designate UDP and apply to register CCO and UDP December 28, 2009, but transition for relationship disclosure set by IIROC and transition until March 28, 2010 for referral arrangements (both existing and new), except for dispute resolution or mediation services September 28, 2011 Mutual Fund MFDA Member Existing reps grandfathered as for investment, but with transition for new CCOs proficiency until Existing CCOs grandfathered, but transition for relationship disclosure set by MFDA and transition until March 28, 2010 for referral arrangements (both existing and new), but transition for quarterly statements of account for clients until September 28, 2011 Scholarship Plan New capital requirements: New insurance requirements: March 28, 2010 for KYC and suitability Transition for referral arrangements: March 28, 2010 Transition for relationship disclosure: Exempt Market Firms operating as of September 28, 2009 must apply for as EMD by Existing registrants (LMDs): September 28, 2010 New applicants: comply when applying for for existing LMDs New applicants: comply when applying for as for scholarship plan for existing LMDs New applicants: comply when applying for for existing LMDs New applicants: comply when applying for as for scholarship plan for existing LMDs New applicants: comply when applying for for existing LMDs New applicants: comply when applying for for existing LMDs New applicants: comply when applying for Portfolio Manager as for scholarship plan as for scholarship plan Investment Fund Manager Firms operating as of September 28, 2009 must apply for as IFM by N/A Comply when applying for Deadline: September 28, 2010 Comply when applying for Deadline: September 28, 2010 Comply when applying for Deadline: September 28, 2010 Comply when applying for Deadline: September 28, 2010 Comply when applying for Deadline: Comply when applying for Deadline: September 28, 2010 N/A 6 7

5 BLG S INVESTMENT MANAGEMENT GROUP The Investment Management Group at Borden Ladner Gervais LLP consists of a team of over 50 lawyers located in offices across Canada who understand the business, regulatory and administrative issues that face participants in the Canadian investment management industry. We have the largest and most experienced investment management practice in Canada, having provided legal services to Canadian and international industry participants for over 50 years. Our lawyers are leaders in investment funds, registrant regulation and compliance, private pooled and hedge funds and structured products. BLG's Investment Management Group is ranked Number 1 in Canada in The Best Lawyers in Canada (2008 and 2009). Several of our lawyers are recognized as leaders in the area of investment funds in industry publications, including: Guide to Leading 500 Lawyers in Canada (Lexpert/American Lawyer) Canadian Legal Lexpert Directory Best Lawyers in Canada Who s Who Legal The International Who s Who of Business Lawyers PLC Cross border Investment Funds Handbook Our clients, both Canadian and international, include open and closed-end investment fund complexes, providers of alternative investment, pooled and private equity products, investment advisers and, financial institutions, service providers, securities regulators, self-regulatory organizations and industry trade associations. Our lawyers have long-standing working relationships with the Canadian securities regulators, including self-regulatory organizations and other government officials, as well as with The Investment Funds Institute of Canada, the Investment Counsel Association of Canada, other industry trade associations and key industry leaders. Our goal at BLG is quite simple: to provide our clients with the best service, by the best professionals. At BLG, it begins with service. Our approach to professional and service excellence is based upon personal standards of absolute integrity, unfailing mutual respect and dedication in all that we do for our clients. BLG is a leading, full-service, integrated national law firm focusing on business law, litigation and intellectual property solutions for our clients. With more than 750 lawyers, intellectual property agents and other professionals in Vancouver, Calgary, Toronto, the Waterloo Region, Ottawa and Montréal, clients turn to BLG for assistance with their legal needs, from major litigation to corporate finance and patent. For more information about BLG and the Investment Management Group, visit 8

6 BLG S INVESTMENT MANAGEMENT GROUP TORONTO OFFICE National Leader John E. Hall jhall@blgcanada.com Regional Leader Lynn M. McGrade lmcgrade@blgcanada.com John F.T. Warren jwarren@blgcanada.com Robert P. Hutchison rhutchison@blgcanada.com Paul G. Findlay pfindlay@blgcanada.com Alfred L.J. Page apage@blgcanada.com Richard E. Austin raustin@blgcanada.com Rebecca A. Cowdery rcowdery@blgcanada.com Carol E. Derk cderk@blgcanada.com Ronald M. Kosonic rkosonic@blgcanada.com Marsha P. Gerhart mgerhart@blgcanada.com Manoj Pundit mpundit@blgcanada.com Prema K.R. Thiele pthiele@blgcanada.com Dolores Di Felice ddifelice@blgcanada.com Brian D. Behrman bbehrman@blgcanada.com Kyle S. Pohanka kpohanka@blgcanada.com Laurie J. Cook lcook@blgcanada.com Donna Spagnolo dspagnolo@blgcanada.com Michael C. DeCosimo mdecosimo@blgcanada.com Kathryn M. Fuller kfuller@blgcanada.com Erin C. Seed eseed@blgcanada.com Sarah K. Gardiner sgardiner@blgcanada.com Julie Hesse jhesse@blgcanada.com Neda Bizzotto abizzotto@blgcanada.com Matthew P. Williams mwilliams@blgcanada.com K. Ruth Liu krliu@blgcanada.com William J. E. Jones wjones@blgcanada.com Francesca Smirnakis fsmirnakis@blgcanada.com Jessica Stern jstern@blgcanada.com Leigh-Ann Ronen lronen@blgcanada.com Senior Advisor Barry J. Myers, FCA bmyers@blgcanada.com Tax Group Craig J. Webster cwebster@blgcanada.com Stephen J. Fyfe sfyfe@blgcanada.com Laura M. White lmwhite@blgcanada.com Natasha Miklaucic nmiklaucic@blgcanada.com 9

7 BLG S INVESTMENT MANAGEMENT GROUP MONTRÉAL OFFICE Regional Leader François Brais fbrais@blgcanada.com Fred Enns fenns@blgcanada.com Louis Clément lclement@blgcanada.com Anick Morin amorin@blgcanada.com Christian Faribault cfaribault@blgcanada.com Élise Renaud erenaud@blgcanada.com Réda Ray Saad rsaad@blgcanada.com Tax Group Virginie Chan vchan@blgcanada.com VANCOUVER OFFICE Regional Leader Jason J. Brooks jbrooks@blgcanada.com H. Scott McEvoy smcevoy@blgcanada.com G. Eric Doherty edoherty@blgcanada.com Jennifer Wilson jwilson@blgcanada.com Michael Waters mwaters@blgcanada.com Stephen P. Robertson srobertson@blgcanada.com OTTAWA OFFICE Regional Leader Jeremy S.T. Farr jfarr@blgcanada.com Tim McCunn tmccunn@blgcanada.com R. Steve Thomas rsthomas@blgcanada.com Tax Group Bernie G. Roach broach@blgcanada.com CALGARY OFFICE Regional Leader Brad J. Pierce bpierce@blgcanada.com Angie Redecopp aredecopp@blgcanada.com 10

8 Borden Ladner Gervais LLP Lawyers Patent & Trade-mark Agents C a l g a r y 1000 Canterra Tower 400 Third Avenue S.W. Calgary, Alberta, Canada T2P 4H2 tel: fax: M o n t r é a l 1000 de La Gauchetière Street West Suite 900, Montréal, Québec, Canada H3B 5H4 tel: fax: We publish Investment Management Advisories from time to time on matters of interest to the investment management industry. If you did not receive this Advisory directly, please contact us by calling BLG-LAW1 or ing subscriptions@blgcanada.com and we will add you to our mailing list for future Advisories. If you received this Advisory in error, or if you do not wish to receive further Advisories, you may also ask to have your contact information removed from our mailing lists. This Investment Management Advisory was prepared as a service to our clients and other persons dealing with investment management issues. It is not intended to be a complete statement of the law or an opinion on the subject. Although we endeavour to ensure its accuracy, no one should act upon it without a thorough examination of the law after the facts of a specific situation are considered. No part of this publication may be reproduced without prior written permission of Borden Ladner Gervais LLP. This Investment Management Advisory has been sent to you courtesy of Borden Ladner Gervais LLP. We respect your privacy, and wish to point out that our privacy policy relative to our publications may be found at Borden Ladner Gervais LLP O t t a w a World Exchange Plaza 100 Queen St., Suite 1100 Ottawa, Ontario, Canada K1P 1J9 tel: legal fax: IP fax: To r o n t o Scotia Plaza, 40 King Street West Toronto, Ontario, Canada M5H 3Y4 tel: fax: Va n c o u v e r 1200 Waterfront Centre 200 Burrard Street, P.O. Box Vancouver, British Columbia, Canada V7X 1T2 tel: fax: Wa t e r l o o R e g i o n Waterloo City Centre 100 Regina Street South, Suite 220 Waterloo, Ontario, Canada N2J 4P9 tel: fax: IP fax: Borden Ladner Gervais LLP is an Ontario Limited Liability Partnership Printed in Canada