The Canadian Securities Administrators (CSA) recently announced the publication of final amendments to the principal distributor model (the Final Amendments) in the distribution of mutual fund securities.
The Final Amendments clarify that a dealer may act as principal distributor only for mutual funds in the same mutual fund family. They do not affect the ability of a principal distributor to also distribute mutual fund securities as a participating dealer to multiple mutual fund families. The Final Amendments also enhance transparency by requiring disclosure of principal distributor arrangements and related compensation in the prospectus, fund facts document. and the annual report on charges and other compensation.
The Final Amendments include the following amendments (the Amendments) to:
- National Instrument 31-103 Registration Requirements, Exemptions and Ongoing
- Registrant Obligations (NI 31-103),
- National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101),
- National Instrument 81-102 Investment Funds (NI 81-102), and
- National Instrument 81-105 Mutual Fund Sales Practices (NI 81-105).
and the following changes (the Changes) to:
- Companion Policy 31-103 Registration Requirements, Exemptions and Ongoing
- Registrant Obligations (31-103CP),
- Companion Policy 81-102 Investment Funds (81-102CP), and
- Companion Policy 81-105 Mutual Fund Sales Practices (81-105CP).
In some jurisdictions, ministerial approvals are required for the implementation of the
Final Amendments. Provided all ministerial approvals are obtained, the Amendments to NI 31-103 will come into force on January 1, 2027, and the Amendments to NI 81-101, NI 81-102, and NI 81-105 will come into force on October 1, 2026. The Changes to 31-103CP will take effect on January 1, 2027, and the Changes to 81-102CP and 81-105CP will take effect on October 1, 2026. However, there are transition periods provided for the Amendments to NI 31-103, NI 81-101 and NI 81-105.
The Final Amendments are available for download from the websites of the participating jurisdictions.
For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.