U.S. and other non-Canadian investment advisers can easily
become qualified to give investment advice to Canadian clients
under Canada's international adviser exemption. Only a few
simple steps need to be taken before starting to use the
How Does Canada Regulate Investment Advisers?
Under Canadian securities laws, you need to be registered as an
adviser if you are in the business of advising anyone in Canada
about investing in securities or buying or selling securities or
derivatives. However, even if the adviser registration requirement
is triggered, a number of exemptions are available, including one
for international advisers.
What Kinds of Advisers Must Register?
The Canadian securities regulators have said that financial
advisers to the parties in an M&A transaction are not normally
required to register as advisers, even though the M&A
transaction may result in trades in securities as a result of their
advice. Further, professionals such as lawyers, accountants,
engineers, geologists and teachers who provide advice on securities
in the normal course of their professional activities are not
required to register.
There is also an exemption for giving general advice that is not
tailored to a specific recipient, as long as the adviser discloses
any financial interest or other potentially conflicting interest it
may have. So, providing information through newsletters, articles
in newspapers or magazines, or on websites, over the Internet or by
radio or television would generally be exempt from the adviser
registration requirement if the required disclosure of financial or
other interests is made.
What Does the International Adviser Exemption Allow?
Even if an adviser registration requirement is triggered, a
non-Canadian adviser can still advise Canadian clients without
registering as an adviser in Canada by using the international
adviser exemption. Under that exemption, an adviser can provide
advice to Canadian permitted clients – a category that
includes institutional investors as well as high net worth
individuals. The advice must relate primarily to securities of
non-Canadian issuers, but may also include incidental advice about
securities of Canadian issuers.
Who Can Qualify as an International Adviser?
An international adviser must have its head office or principal
place of business outside Canada, must be in business as an adviser
in its home country and must either be registered as an adviser or
be able to rely on an adviser registration exemption in its home
country. International advisers may not earn more than 10% of their
gross worldwide revenue from their activities in Canada.
What Must Be Done Before Using the International Adviser
Before it can use the international adviser exemption, the
adviser must appoint an agent for service of process –
typically a Canadian law firm – in each province where it
will be providing advice. The adviser must also file a notice with
the securities regulator in that province, stating that it will be
relying on the exemption. Finally, each Canadian client must
receive a notice containing prescribed information, including the
name and address of the agent for service of process in Canada and
a warning that the adviser is not registered as an adviser in
Are There Ongoing Reporting or Other Obligations?
An adviser relying on the international adviser exemption must
file a monthly report with the Canadian securities regulators under
the reporting rules relating to terrorist financing and United
The adviser must also give an annual notice to the Canadian
securities regulators stating that it is relying on the
international adviser exemption. In the province of Ontario, the
adviser must pay an annual fee, which is based on the amount of
revenue the adviser has earned during the year through its
activities in Ontario.
Canada and the United States have a lot in common, including the
general principles behind their securities laws. But there are some
differences you might find surprising.
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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