Canadian Securities Law : Canadian Securities Lawyer & Attorney : Stikeman Elliott Law Firm : Montreal, Ottawa, Calgary, Vancouver, Montreal, Toronto

Proposed NI 31-103 - Registration Requirements requires investment fund managers to register and to comply with prescribed proficiency, capital and conduct standards.

Currently, investment fund managers that administer an investment fund but do not advise or trade are generally not required to be registered. However, the Canadian Securities Administrators (CSA) are proposing an investment fund manager registration that encompasses the managers of all public and private mutual funds and non-redeemable investment funds, labour-sponsored investment funds, scholarship plans, pooled funds and hedge funds.

The key elements of this new category of registration include: (a) a registration requirement for a person or company acting as an investment fund manager; (b) two new categories of individual registration requiring all registered firms to designate an individual as the ultimate designated person (UDP) and the chief compliance officer (CCO); (c) proficiency requirements for the CCO (but not the UDP) of an investment fund manager; (d) insurance requirements; (e) a $100,000 minimum excess working capital requirement (for non-SRO members); and (f) conduct rules for investment fund managers.

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Proposed NI 31-103 - Registration Requirements removes current limited market dealer category and introduces exempt market dealer category in its place.

In late February, 2007, the CSA published for comment proposed NI 31-103 - Registration Requirements (the Proposed Registration Rule) and accompanying companion policy (Companion Policy). The impetus for the Proposed Registration Rule is the harmonization and streamlining of the registration regime across all of the CSA jurisdictions by, among other things, moving away from the "trade trigger" towards a "business trigger" for dealer registration, and introducing several new categories of registration while removing others. One of the implications of these changes is that the current limited market dealer (LMD) category will cease to exist, and (except perhaps in British Columbia) an exempt market dealer (EMD) category will take its place. Further, in conjunction with moving towards a "business trigger" for dealer registration, the CSA propose to repeal the dealer registration exemptions currently contained in NI 45-106 - Prospectus and Registration Exemptions, including (except perhaps in British Columbia) the accredited investor exemption which will, however, remain available for prospectus exemption purposes.

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