The Canadian Securities Administrators (CSA)
has recently proposed various amendments to National Instrument 31-103
Registration Requirements, Exemptions and Ongoing Registrant
Obligations (NI 31-103) that include, a
proposal to add an experience component to the proficiency
requirement to be a chief compliance officer (CCO)
of not only an exempt market dealer (EMD) but also
for a mutual fund dealer (MFD) and scholarship
plan dealer (SPD). If implemented, it will get a
lot tougher to be a CCO for an EMD, MFD and SPD. The CSA proposal
would require a CCO candidate to have,
"gained 12 months of relevant securities industry
experience in the 36-month period before applying for
The CSA states that the proposed amendment results from its
findings during compliance reviews of dealer firms and aligns with
the requirement that registered individuals must not perform any
activity that requires registration unless they also have the
experience that a reasonable person would consider necessary to
perform the activity competently.
The CSA further states that during the course of its compliance
reviews, they have identified a number of dealer firms that have
CCOs who are not adequately performing their responsibilities, and
this deficiency is often associated with a finding that the CCO
does not have the relevant experience. The CSA states that by
adding the experience component for CCOs of dealers, the CSA would
be harmonizing the proficiency requirements with those applicable
to CCOs of portfolio managers and investment fund manager.
What does 'relevant securities industry experience'
The Companion Policy to NI 31-103 presently includes guidance on
the meaning of the phrase 'relevant securities industry
experience' which includes experience acquired:
during employment at a registered dealer, a registered adviser
or an investment fund manager in related investment fields, such as
investment banking, securities trading on behalf of a financial
securities research, portfolio management, investment advisory
services or supervision of those activities
in legal, accounting or consulting practices related to the
in other professional service fields that relate to the
securities industry, or
in a securities-related business in a foreign
Other proficiency matters
The CSA have also proposed revising the Companion Policy in
connection with section 3.4 of NI 31-103 involving initial and
ongoing proficiency requirements with the addition of the following
CCO specific requirement:
"CCOs must have a good understanding of the
regulatory requirements applicable to the firm and individuals
acting on its behalf. CCOs must also have the knowledge and ability
to design and implement an effective compliance
Raising the bar for new CCOs would make it more difficult to be
a CCO and possibly limit the number of new EMDs, MFDs and SPDs
entering the marketplace assuming there are a limited number of
individuals who could satisfy these requirements.
Readers are encouraged to provide comments to the CSA
If readers have any issues, comments or concerns in
connection with these proposed CCO experience requirements or other
matters in the proposed NI 31-103 amendments, you are encouraged to
provide comments to the CSAbefore the end of the
comment period on March 6, 2014.
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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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.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan 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.
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