Regulatory Alerts2025-06-26
Draft Regulation to amend Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations
The securities regulator issued a draft regulation to amend Regulation 31-103 by introducing Division 4, which addresses certain compensation practices. The new rule prohibits registrants from requiring or causing affiliates to require the reimbursement of upfront commissions or sales charges upon the redemption of investment fund securities. This measure aims to eliminate compensation structures that may incentivize the retention of clients holding redeemable securities for the benefit of the distributor rather than the investor.
REGULATION TO AMEND REGULATION 31-103 RESPECTING REGISTRATION REQUIREMENTS, EXEMPTIONS AND ONGOING REGISTRANT OBLIGATIONS Securities Act (chapter V-1.1, s. 331.1, par. (8) and (26))
- Part 11 of Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations (chapter V-1.1, r. 10) is amended by adding, after Division 3, the following: “DIVISION 4 Certain compensation practices 11.11. Compensation practices tied to redemptions of investment fund securities A registrant must not require and, for greater certainty, must not cause an affiliate to require, in connection with the redemption by a client of a security of an investment fund that is a reporting issuer, that a registered firm or individual pay or reimburse all or part of an upfront commission, fee, sales charge or other compensation received by the registered firm or individual in connection with the distribution of the security.”.
- This Regulation comes into force on (indicate here the date of coming into force of this Regulation).
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