The long-awaited "Stage 2" package of reforms that
apply to mutual fund "point of sale" disclosure has now
been finalized by the Canadian Securities Administrators (CSA) and
the rule amendments are expected to come into effect on September
1, 2013. Amendments to National Instrument 81-101 Mutual Fund
Prospectus Disclosure (NI 81-101) and its companion policy (as well
as consequential amendments made to National Instrument 81-102
Mutual Funds) were finalized and published on June 13, 2013 [available here].
This package of reforms will require all mutual funds to file
amended Fund Facts that comply with new disclosure requirements by
May 13, 2014. Dealers will be required to deliver the applicable
Fund Facts to investors in mutual funds within 2 days of the trade
(which is the same timing as currently required for delivery of
prospectuses) on and after June 13, 2014. Simplified prospectuses
will no longer be required to be delivered to investors after June
Although significant new disclosure requirements are still
mandated for Fund Facts, the CSA pulled back on some of the more
controversial disclosure proposals in response to industry feedback
and as a result of their own testing of the revised Fund Facts
documents. The final rules – and the transition periods
– reflect an understanding by the CSA of the reasons
prompting the feedback and will result in improvements to Fund
Facts disclosure for investors.
We received feedback from OSC staff on a few implementation
issues, including the status of "PAC" prospectus delivery
relief, the ability to file Fund Facts using the new form after the
effective date of the amendments (September 1, 2013), but before
January 13, 2014 (to allow for one filing, rather than two filings
in 2014) and confirmation that the "sunset" clause for
the existing relief allowing for delivery of Fund Facts rather than
the simplified prospectus means that the relief expires on June 13,
2014 and not before.
Please click here to review our Investment Management
Bulletin Canadian Securities Regulators Finalize New Format for
Fund Facts and Mandate Delivery Effective June 13, 2014.
The British Columbia Court of Appeal has recently considered whether the doctrine of unconscionability can be invoked to set aside a contractual clause providing for the payment by one party to the other...
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