On December 16, 2021, the Canadian Securities Administrators (the CSA) announced that amendments to legislation clarifying the “Outside Activity” (OA) reporting framework and modernizing registration information requirements (the Amendments), have been finalized and will be coming into force on June 6, 2022.
Generally, the Amendments will involve changes to National Instrument 33-109 Registration Information (NI 33-109) (and its Companion Policy and related forms) and National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) (and its Companion Policy). The initial proposed changes were previously discussed in an AUM Law Bulletin. Overall, the Amendments are meant to address issues identified by CSA Staff and registrants by providing clarifications on submitting registration information that is frequently incorrect, and to reduce regulatory burden.
In regard to the OAs, the Amendments change the term from “Outside Business Activities” to “Outside Activities” and establish a new framework for reporting outside activities to regulators. Appendix C of the Companion Policy to NI 33-109 outlines and provides examples for the following 5 categories of activities that are considered OAs:
- Activities with another registered firm
- Activities with an entity that receives compensation from another registered firm for the registrant’s registrable activity
- Other securities-related activities
- Provision of financial or finance-related services
- Positions of influence
The guidance also stresses that firms are responsible for conflicts of interest arising from all OAs, even if they are not reportable to regulators.
Other key takeaways are that the guidance relating to OAs that can be considered positions of influence will now be codified in section 13.4.3 of NI 31-103, and activities with an affiliate are to be reported as OAs.
Currently, registrants are required to file OBA disclosure within 10 days of a new OBA or a change to an existing OBA. The Ontario Securities Commission is extending its moratorium on fees related to overdue OBA filings until the Amendments come into force on June 6, 2022. Registrants must still disclose OBA information, but no fees will be charged for overdue filings while the moratorium is in effect. After June 6, 2022, the Amendments mandate that registrants will be required to file OA disclosure within 30 days.
Although the Amendments will be coming into force on June 6, 2022, the CSA clarifies that they do not expect registrants to update their information, such as reporting the OAs under the new framework, until there has been a change in the registration information previously provided. If there has been a change, the registrant will be expected to review and update all information, to make sure it is compliant with the new requirements in the Amendments.
A requirement unrelated to the OAs worth mentioning is that firms will now be required to report the business titles and professional designations used by registered individuals, likely to provide a way for regulators to monitor firms’ compliance with the new titles requirements.
If you have additional questions about the above, please contact your usual lawyer at AUM Law to discuss. We would also be happy to discuss updating your policies and procedures to reflect the Amendments, as well as potential training opportunities for your employees.
January 31, 2021