On July 5, 2012, the Canadian Securities Administrators
published final versions of Multilateral Instrument 32-102
Registration Exemptions for Non-Resident Investment Fund
Managers (MI 32-102) and Multilateral Policy 31-202
Registration Requirements for Investment Fund Managers (MP 31-202) relating to registration
requirements and exemptions for investment managers headquartered
in Canada (Canadian investment fund managers).
The final versions of MI 32-102 and MP 31-202 follow earlier
proposals that were published in February 2012 and discussed in a
February 17, 2012
The Exemption-Based Jurisdictions will adopt MI 32-102. All
other provinces and territories (the Policy-Based Jurisdictions),
including New Brunswick, which in February had supported MI 32-102,
will adopt MP 31-202. Regrettably, and despite the urgings of many
of the commenters on the February proposals, including Osler, there will not be one harmonized
approach in Canada to registration requirements and exemptions for
Canadian investment fund managers.
Both MI 32-102 and MP 31-202 remain largely consistent with the
versions published in February 2012.
In the Exemption-Based Jurisdictions, any Canadian investment
fund manager of one or more investment funds will be required to
register as a non-resident investment fund manager in each
Exemption-Based Jurisdiction unless it does not have a place of
business in the Exemption-Based Jurisdiction and (i) none of the
investment funds has investors resident in the Exemption-Based
Jurisdiction or (ii) it is eligible to rely on the
"grandfathering" exemption in MI 32-102.
The "grandfathering" exemption from registration is
available for a Canadian investment fund manager in instances where
the manager (i) has no securityholders resident in an
Exemption-Based Jurisdiction, and (ii) does not, after September
27, 2012, "actively solicit" residents in that
Canadian investment fund managers who will need to register in
an Exemption-Based Jurisdiction will have until December 31, 2012
to apply for registration as an investment fund manager.
A Canadian investment fund manager will only be required to
register in a Policy-Based Jurisdiction if it directs or manages
the business, operations or affairs of the investment fund in that
jurisdiction, in a way that establishes a substantial connection to
that jurisdiction. The revised MP 31-202 clarifies the concept of a
connection to a jurisdiction. Specifically, under MP 31-202,
solicitation of investors or the distribution of securities in a
Policy-Based Jurisdiction will not give rise to investment fund
manager registration, unless those activities are directed from
within the jurisdiction and result in the person directing
or managing the business operations or affairs of an investment
fund in the jurisdiction.
MI 32-102 and MP 31-202 will come into force on September 28,
2012. However, there will be a three-month transition period for
affected Canadian investment fund managers to seek registration in
the Exemption-Based Jurisdictions if required.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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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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