Regulators propose registration exemptions for non-resident IFMs
Regulators from Ontario, Quebec, New Brunswick and Newfoundland and Labrador today published a proposed multilateral instrument that would exempt non-resident investment fund managers from the requirement to register in circumstances where there are no security holders of the investment fund, or active solicitation of residents, in the local jurisdiction. The instrument, which would apply in the participating jurisdictions, would apply to investment fund managers that do not have their head office or principal place of business in a jurisdiction of Canada and that do not have a place of business in the local jurisdiction. An exemption would also exist from the registration requirement in cases of distributions only to permitted clients.
Ultimately, the exemption from registration would extend the current temporary exemptions found in NI 31-103 and require affected investment fund managers to apply for registration by December 31, 2012. The participating regulators are accepting comments on the proposal until April 10, 2012. For more information, see proposed MI 32-102.
Meanwhile, securities regulators in the remaining provinces and territories have published a separate multilateral instrument that would allow the applicable exemptions found in NI 31-103 to expire on September 28, 2012 as planned, but would subsequently interpret the registration requirements to only require any entity to register as an investment fund manager in a jurisdiction if it directs or manages the business, operations or affairs of an investment in that jurisdiction. In determining whether registration is required, the proposed instrument would look at the functions and activities of the entity, and the presence of security holders and the solicitation of investors in a jurisdiction would not automatically require an investment fund manager to register. Affected investment fund managers in these jurisdictions would be required to apply for registration by September 28, 2012. Like the proposed instrument described above, comments are being accepted until April 10, 2012. For more information, see proposed MI 31-202.
In both cases, the proposals are intended to replace the CSA proposal published in October 2010, with which the CSA are not proceeding.
