Canadian Securities Administrators (CSA) Notice
31-320, published October 15, 2010, proposes amendments to
National Instrument 31-103 Registration Requirements &
Exemptions (NI 31-103) and its companion policy that introduce an
international investment fund manager registration exemption. The
Notice also proposes an exemption from registration for domestic
fund managers (for non-principal regulators) and foreign fund
managers meeting certain conditions, as well as other minor changes
to NI 31-103. Comments are requested by January 13, 2011. Market
participants are reminded that investment fund manager registration
requirements are scheduled to apply to foreign fund managers and
domestic fund managers (in addition to the jurisdiction in which
their head office is located) by the end of September 2011.
The international investment fund registration exemption,
similar to the international dealer and adviser registration
exemptions, is limited to activities with permitted clients as
defined in NI 31-103. As a result, the registration exemption is
available only to a foreign fund manager of an investment fund if
all securities of the investment fund are distributed only to
"permitted clients." In addition, the fund manager must
not have a physical place of business in Canada, the investment
fund must be formed under the laws of a foreign jurisdiction, the
securities of the investment fund must be distributed under
prospectus exemptions, and the investment fund cannot be a
reporting issuer in Canada. Similar to the international adviser
registration exemption, Canadian asset thresholds must not be
surpassed: the fair value of all of the assets attributable to
Canadians of any investment fund for which the fund manager acts
cannot be more than 10 per cent of all assets of that fund, and the
total assets of all funds managed by the investment fund manager
attributable to Canadians must be less than $50 million. The
international investment fund manager exemption will be subject to
similar client disclaimer and submission-to-jurisdiction and
appointment-of-agent-for-service filing requirements as the
exemptions that are available for international dealers and
advisers. A fund manager wishing to rely on the exemption must
notify the securities regulators annually by December 1.
A "grandfathering" exemption for all jurisdictions
(other than its head office jurisdiction, in the case of a domestic
fund manager) is proposed for domestic and foreign fund managers
where the manager and the investment fund have not actively
solicited local residents after September 28, 2011. This new
exemption is subject to a number of conditions including that the
investment fund is not a reporting issuer, the investment fund and
fund manager are not formed under the laws of the local
jurisdiction, and the activities of the fund manager are not
conducted from a physical place of business in the local
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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