A recent targeted review by the Canadian Securities
Administrators (CSA) of the relationship disclosure practices of
124 registered portfolio managers and exempt market dealers
revealed a number of common deficiencies, and some best practices,
as set out in CSA Staff Notice 31-334
The Notice was published shortly after the first effective date
– July 15, 2013 – of the CSA's new client
relationship disclosure and reporting requirements (CRM-2)
amendments to National Instrument 31-103 Registration Requirements,
Exemptions and Ongoing Registrant Obligations
(NI 31-103). For details of the CRM-2 amendments and applicable
transition periods see BLG's Investment Management Bulletin
Canadian Securities Administrators Finalize Rules Requiring
Enhanced Account Level Disclosure by Registrants: Effective July
Elements of the CRM-2 amendments that came into effect on July
15, 2013 include the following enhancements to the prescribed
relationship disclosure information (RDI) requirements
clarification that RDI must be provided in writing, subject to
more specific cost disclosure requirements including
distinguishing between "operating charges" and
the requirement for a registrant to provide 60 days' prior
written notice before imposing new or increased operating charges
in respect of a client's account
Other key elements of CRM-2 will be phased in over a 3-year
period including further enhancements to the RDI requirements.
In addition to the rule amendments, the Companion Policy to NI
31-103 contains expanded discussion on the CSA's expectations
with respect to the manner in which the prescribed RDI requirements
are to be implemented by registered firms, with particular emphasis
on disclosure about investing in mutual funds.
In light of the new RDI requirements and the Notice, registrants
should take the opportunity to review their RDI practices, and
revise as necessary, to ensure they meet not only the prescribed
RDI requirements but also the CSA's policy objectives behind
the requirements – i.e. clear, relevant and understandable
information that enables clients to make informed decisions.
RDI practices the CSA find acceptable include:
providing the prescribed RDI in a number of different
delivering RDI in person, by mail, by fax or
requiring clients to acknowledge receipt of RDI, including RDI
Areas of disclosure where deficiencies were most noted
lack of written policies and procedures concerning the
preparation, delivery and updating of RDI
description of the nature or type of the client's
description of the risks that a client
description of the conflicts of interest a firm has
description of the content and frequency of reporting by the
BLG's CRM-2 Road-Map for Compliance Service
The CRM-2 amendments generally, and the RDI enhancements
specifically, are complex and represent significant new compliance
obligations for firms, their representatives and executives.
Conversations with your clients will be expected to change as will
your account opening procedures and documentation, pre-trade
procedures, trade confirmations and client account statements. To
assist you with your compliance obligations, BLG is offering for a
fixed fee – BLG's CRM-2 Road-Map for Compliance
available here. BLG's compliance specialists have the depth
of expertise and experience to help you develop a customized
road-map for compliance, including developing compliance project
plans, reviewing and revising account opening documentation and
conducting training and continuing education sessions for advisors,
representatives, compliance professionals and executives.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
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