The proposed amendments will require that registered firms
ensure that a "Canadian custodian" or a "foreign
custodian" holds securities and cash of a client or an
investment fund in certain circumstances. The terms
"Canadian custodian" and "foreign custodian"
would be newly defined in NI 31-103. Self-custody and the use
of a custodian that is not functionally independent of a registered
firm would be prohibited under the proposed amendments, subject to
certain exceptions. The proposed amendments also contemplate
certain disclosure requirements with respect to where and how
client assets are held and accessed. Registered firms that
are members of the Investment Industry Regulatory Organization
of Canada (IIROC) and the Mutual Fund Dealers Association of
Canada (MFDA) would be exempted from these particular
elements of the proposed amendments so long as they comply with the
corresponding IIROC and MFDA rules, as applicable.
NI 31-103 would also be amended to clarify that exempt market
dealers are not permitted to participate in offerings of securities
under prospectuses in any capacity. According to the CSA,
this includes, for example: (i) acting as an underwriter and
selling group member for a distribution of securities offered under
a prospectus; (ii) participating in the sale of special warrants
convertible into securities that are prospectus-qualified; and
(iii) establishing an omnibus account with an investment dealer and
trading listed securities through the investment dealer on behalf
of its clients. The CSA has proposed the addition of significant
guidance to 31-103CP dealing with these matters.
Under the proposed amendments, the dealer registration exemption
under section 8.6 of NI 31-103 for investment fund trades by an
adviser to a managed account would incorporate an additional
condition. That condition would require that the adviser
seeking to rely on the exemption or an affiliate of that adviser
act as the investment fund manager of the fund.
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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