Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations

REGULATION IN FORCE FROM JANUARY 5, 2022 TO MAY 31, 2022 Regulation 31-103 January 5, 2022 Page 1 Last modification in force on January 5, 2022 This document has official status chapter V-1.1, r. 10

REGULATION 31-103 RESPECTING REGISTRATION REQUIREMENTS, EXEMPTIONS AND ONGOING REGISTRANT OBLIGATIONS O.C. 2009-04, Title; O.C. 2011-03, s. 1. Securities Act (chapter V-1.1, s. 331.1)

PART 1 INTERPRETATION

1.1. Definitions of expressions used in this regulation In this regulation, the following expressions apply:

"ACFM": the Canadian Mutual Fund Dealers Association;

"designated rating agency": a designated rating agency as defined in Regulation 44-101 on Distribution of Securities using a Simplified Prospectus (chapter V-1.1, r. 16);

"successor rating agency": a successor rating agency as defined in Regulation 44-101 on Distribution of Securities using a Simplified Prospectus;

"home jurisdiction": the home jurisdiction as defined in section 4A.1 of Regulation 11-102 on the Passport System (chapter V-1.1, r. 1);

"Schedule III bank": a foreign authorized bank listed in Schedule III of the Bank Act (S.C. 1991, c. 46);

"temporary hold": a hold imposed on the subscription, purchase or sale of a security effected for the account of a client or on the withdrawal or transfer of funds or securities from a client's account;

"principal office": the office of the sponsoring company where an individual carries out the majority of their activities;

"eligible client": a client of a person who falls into one of the following categories:

REGULATION IN FORCE FROM JANUARY 5, 2022 TO MAY 31, 2022 Regulation 31-103 January 5, 2022 Page 2 a) they are an individual who was a client of the person before becoming a resident of the relevant territory; b) they are the spouse or child of a client referred to in paragraph a; c) except in Ontario, they were a client of the person on September 27, 2009 under an exemption from the registration requirement provided in Part 5 of Regulation 11-101 on the Home Jurisdiction System (O.C. 2005-18, 05-08-09) on that date;

"authorized client": the following entities: a) a Canadian financial institution or a Schedule III bank; b) the Canada Development Investment Corporation established under the Canada Development Investment Corporation Act (S.C. 1995, c. 28); c) a subsidiary of a person referred to in paragraph a or b, to the extent that it owns all the voting securities of the subsidiary, except those that the directors of the subsidiary must, by law, own; d) a person registered under the securities legislation of a territory of Canada as a dealer, mutual fund dealer or exempt market dealer; e) a pension plan regulated either by the Office of the Superintendent of Financial Institutions Canada or by a pension commission or similar regulatory authority of a territory of Canada, or a wholly-owned subsidiary of such a pension plan; f) an entity incorporated in a foreign territory that is analogous to those referred to in paragraphs a to e; g) the Government of Canada or a territory of Canada, or a Crown corporation, public body or entity wholly-owned by the Government of Canada or a territory of Canada; h) any national, federal, state, provincial, territorial or municipal government of a foreign country or in a foreign country, or any agency of such a government or administration; i) a municipality, public board or commission in Canada and a metropolitan community, school board, the Montreal School Taxation Management Committee or an intermunicipal board in Quebec; j) a trust company registered or authorized to carry on business under the Trust and Loan Companies Act (S.C. 1991, c. 45) or an equivalent law in a territory of Canada or in a foreign territory, and acting for an account managed by it;

REGULATION IN FORCE FROM JANUARY 5, 2022 TO MAY 31, 2022 Regulation 31-103 January 5, 2022 Page 3 k) a person acting for an account managed by it if it is registered or authorized to carry on the business of adviser or equivalent under the securities legislation of a territory of Canada or a foreign territory; l) an investment fund that meets at least one of the following conditions: i) it is managed by a person who is registered as an investment fund manager under the securities legislation of a territory of Canada; ii) it is advised by a person authorized to act as an adviser under the securities legislation of a territory of Canada; m) in relation to a dealer, a registered charity under the Income Tax Act (R.S.C. 1985, c. 1) that, with respect to the securities involved in the transaction, obtains advice from an eligibility adviser, as defined in section 1.1 of Regulation 45-106 on Prospectus Exemptions (chapter V-1.1, r. 21), or from a registered adviser under the securities legislation of the territory of that charity; n) in relation to an adviser, a registered charity under the Income Tax Act that, with respect to the securities involved in the transaction, is advised by an eligibility adviser, as defined in section 1.1 of Regulation 45-106 on Prospectus Exemptions, or a registered adviser under the securities legislation of the territory of that charity; o) an individual who has beneficial ownership of financial assets, as defined in section 1.1 of Regulation 45-106 on Prospectus Exemptions, having a total gross realization value before tax, but after deducting corresponding liabilities, of more than $5,000,000; p) a person of whom one or more individuals referred to in paragraph o have exclusive beneficial ownership, either directly or through a trust whose trustee is a trust company registered or authorized to carry on business under the Trust and Loan Companies Act or an equivalent law in a territory of Canada or in a foreign territory; q) a person, excluding an individual or an investment fund, whose total net assets amount to at least $25,000,000 according to their latest financial statements;

REGULATION IN FORCE FROM JANUARY 5, 2022 TO MAY 31, 2022 Regulation 31-103 January 5, 2022 Page 4 r) a person that places securities issued by it only in Canada with persons referred to in paragraphs a to q;

"vulnerable client": any client who may be affected by a limitation related to aging, illness, disability or incapacity that puts them at risk of financial exploitation;

"trail commission": any payment relating to securities belonging to a client who is part of a series of periodic payments made by any party to a registered company or an individual registrant;

"managed account": a client's account for which a person makes investment decisions, to the extent that they have discretionary power to effect transactions on securities, without having to obtain the client's consent for each transaction;

"restricted dealer": a person registered in the restricted dealer category;

"mutual fund dealer": a person registered in the mutual fund dealer category;

"dealer": a person registered in the dealer category;

"RESP dealer": a person registered in the RESP dealer category;

"exempt market dealer": a person registered in the exempt market dealer category;

"book value": the total amount paid to purchase a security, including transaction costs related to its purchase, adjusted to take into account reinvested distributions, capital repayments and reorganizations;

"original cost": the total amount paid to purchase a security, including transaction costs related to its purchase;

"Canadian custodian": one of the following entities: a) a bank listed in Schedule I, II or III of the Bank Act (S.C. 1991, c. 46); b) a trust company incorporated under the laws of Canada or a territory of Canada, which holds a permit or registration issued under the laws of Canada or a territory of Canada, and which has, according to its latest audited financial statements, net assets of at least $10,000,000;

REGULATION IN FORCE FROM JANUARY 5, 2022 TO MAY 31, 2022 Regulation 31-103 January 5, 2022 Page 5 c) a corporation incorporated under the laws of Canada or a territory of Canada, which is a member of the group of a bank or trust company referred to in paragraph a or b, provided that one of the following conditions is met: i) it has, according to its latest audited financial statements, net assets of at least $10,000,000; ii) the bank or trust company has assumed responsibility for all custody obligations regarding the funds and securities it holds for a client or an investment fund; d) a dealer member of the Canadian Investor Protection Fund (CIPF) who is authorized under the rules of the organization, and their amendments, to hold the funds and securities of a client or an investment fund;

"foreign custodian": one of the following entities: a) an entity that meets the following conditions: i) it is incorporated under the laws of a country, or a political subdivision of a country, other than Canada; ii) it is regulated as a banking institution or trust company by the government, a public body or a political subdivision of that country; iii) it has, according to its latest audited financial statements, net assets of at least $100,000,000; b) a member of the group of an entity referred to in paragraph a, b or c of the definition of "Canadian custodian", or in paragraph a of this definition, provided that one of the following conditions is met: i) this group member has, according to its latest audited financial statements, net assets of at least $100,000,000; ii) this entity has assumed responsibility for all custody obligations of this group member regarding the funds and securities held by it for a client or an investment fund;

"qualified custodian": a Canadian custodian or a foreign custodian;

"ACFM provision": an internal regulation, rule, by-law or policy of the ACFM listed in Appendix H, and its amendments;

"CIPF provision": an internal regulation, rule, by-law or policy of the CIPF listed in Appendix G, and its amendments;

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"associated issuer": an associated issuer as defined in section 1.1 of Regulation 33-105 on Conflicts of Interest (chapter V-1.1, r. 11);

"related issuer": a related issuer as defined in section 1.1 of Regulation 33-105 on Conflicts of Interest;

"financial exploitation": the act of a person using or controlling any financial asset of an individual, or depriving them of its use or control, by exerting undue influence, engaging in illegal conduct or committing any other wrongful act;

"subsidiary": a subsidiary as defined in section 1.1 of Regulation 45-106 on Prospectus Exemptions;

"operating fees": any amount charged to the client by a registered company relating to the operation, transfer or closure of the client's account, including federal, provincial or territorial sales taxes paid on that amount;

"transaction fees": any amount charged to the client by a registered company relating to the purchase or sale of a security, including federal, provincial or territorial sales taxes paid on that amount;

"portfolio manager": a person registered in the portfolio manager category;

"restricted portfolio manager": a person registered in the restricted portfolio manager category;

"Canadian financial institution": a Canadian financial institution as defined in section 1.1 of Regulation 45-106 on Prospectus Exemptions;

"market": a market as defined in section 1.1 of Regulation 21-101 on Marketplace Operations (chapter V-1.1, r. 5);

"member of the same group as the designated rating agency": a member of the same group as a designated rating agency that publishes ratings in a foreign territory and has been designated as such in accordance with the terms of the designation of the designated rating agency;

"designated rating": a designated rating as defined in Regulation 81-102 on Investment Funds (chapter V-1.1, r. 39);

"CIPF": the Canadian Investor Protection Fund;

"interim period": a period beginning on the first day of the fiscal year and ending either 3, 6 or 9 months, as applicable, before the end of the fiscal year;

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"trusted person": the individual designated by the client with whom the registered person may communicate in accordance with the client's written consent;

"individual registrant": the following individual: a) the one who is registered in a category allowing them to act as a dealer or adviser on behalf of a registered company; b) the one who is registered as a responsible individual; c) the one who is registered as the chief compliance officer;

"registered company": a registered dealer, a registered adviser or a registered investment fund manager;

"sponsoring company": the registered company in a territory of Canada on whose behalf an individual acts as a dealer, salesperson, adviser, chief compliance officer or responsible individual;

"sub-adviser": the adviser of one of the following persons: a) a registered adviser; b) a registered dealer who acts as a portfolio manager in accordance with section 8.24;

"total rate of return": the realized and unrealized capital gains and losses of an investment, plus the investment income, over a given period, expressed as a percentage;

"principal territory": as the case may be, the following territories: a) in relation to a person other than an individual, the territory of Canada where its head office is located; b) in relation to an individual, the territory of Canada where their principal office is located;

"debt security": a debt security as defined in section 1.1 of Regulation 45-106 on Prospectus Exemptions.

O.C. 2009-04, s. 1.1; O.C. 2010-17, s. 1; O.C. 2011-03, s. 2; O.C. 2012-01, s. 1; O.C. 2013-11, s. 1; O.C. 2014-10, s. 1; O.C. 2017-09, s. 1; O.C. 2018-03, s. 1; O.C. 2021-14, s. 1; O.C. 2021-16, s. 1.

1.2. Interpretation of "security" in Alberta, British Columbia, New Brunswick, Nova Scotia and Saskatchewan

1. Subject to sections 8.2, 8.26 and 14.5.1, in British Columbia, the expression "security" also includes a "negotiable instrument", unless the context requires a different meaning.
2. Subject to sections 8.2, 8.26 and 14.5.1, in Alberta, New Brunswick, Nova Scotia and Saskatchewan, the expression "security" also includes a "derivative", unless the context requires a different meaning.

O.C. 2009-04, s. 1.2; N.I. 2015-04-01; N.I. 2017-05-01; O.C. 2017-09, s. 2; O.C. 2017-09, s. 3.

1.3. Submission of information to the home jurisdiction

1. (paragraph repealed).
2. Any notice or document to be filed or submitted to the supervisory agent or the securities regulatory authority in accordance with this regulation may be filed or submitted to the home jurisdiction of the person.
3. (paragraph repealed).
4. Despite paragraph 2, with respect to the notification and transmission obligations provided for in section 11.9, if the registered person and the company referred to in subparagraph a or b of paragraph 1 of section 11.9 if it is registered in a territory of Canada do not have the same home jurisdiction, the registered person transmits the written notice to the following persons: a) their home jurisdiction; b) the home jurisdiction of the company referred to in subparagraph a or b of paragraph 1 of section 11.9, as applicable, if it is registered in a territory of Canada.
5. Paragraph 2 does not apply to the following sections: a) section 8.18; b) section 8.26.

O.C. 2009-04, s. 1.3; O.C. 2011-03, s. 3; O.C. 2014-10, s. 2.

PART 2 CATEGORIES OF INDIVIDUAL REGISTRANTS

2.1. Categories of individuals

1. An individual required to register under securities legislation to act on behalf of a registered company registers in one or more of the following categories: a) dealer representative; b) adviser representative; c) assistant adviser representative; d) responsible individual; e) chief compliance officer.

2. The individual registered in the relevant category may do the following: a) the dealer representative may act as a dealer or salesperson with respect to the same securities as those permitted to their sponsoring company; b) the adviser representative may act as an adviser with respect to the same securities as those permitted to their sponsoring company; c) the assistant adviser representative may act as an adviser with respect to the same securities as those permitted to their sponsoring company if their advice is approved by an adviser representative in accordance with paragraph 1 of section 4.2; d) the responsible individual performs the functions provided for in section 5.1; e) the chief compliance officer performs the functions provided for in section 5.2.

3. Paragraph 1 does not apply in Ontario.

O.C. 2009-04, s. 2.1.

2.2. Exemption based on client mobility – individuals

1. The registration requirement does not apply to the individual when the following conditions are met: a) they are registered in their principal territory as a dealer representative, adviser representative or assistant adviser representative; b) their sponsoring company is registered in their principal territory;

REGULATION IN FORCE FROM JANUARY 5, 2022 TO MAY 31, 2022 Regulation 31-103 January 5, 2022 Page 10 c) they act as a dealer, salesperson or adviser in the relevant territory only to the extent that they can carry out these activities in their principal territory according to their registration; d) they act as a dealer, salesperson or adviser with respect to at most 5 eligible clients in the relevant territory; e) they comply with the provisions of Part 13; f) they act honestly, in good faith and fairly in their relationships with their eligible clients; g) before acting as a dealer or adviser with an eligible client for the first time, the individual's sponsoring company has informed the client that the individual, and the company if it relies on section 8.30, is in the following situation: i) they are exempt from registering in the relevant territory; ii) they are not required to comply with the obligations provided by the securities legislation of that territory.

2. When an individual relies on the exemption provided by this section, their sponsoring company submits the form provided for in Appendix 31-103A3, Exemption Based on Mobility, to the securities regulatory authority of the relevant territory as soon as possible after it has relied on this section for the first time.

O.C. 2009-04, s. 2.2; O.C. 2017-09, s. 44.

2.3. Individual acting for an investment fund manager

The registration requirement as an investment fund manager does not apply to the individual acting on behalf of a registered investment fund manager.

O.C. 2009-04, s. 2.3.

PART 3 REGISTRATION OBLIGATIONS OF INDIVIDUALS

SECTION 1 General Competency Obligations

3.1. Definitions – competency In this Part, the following expressions apply:

"AAD Exam": one of the following exams: a) the Executives, Partners and Directors Exam developed and administered by the IFSE Institute, under the name given to it on September 28, 2009, as well as any prior or subsequent exam whose scope and content are not substantially less than those of the exam in question; b) the Partners, Directors and Executives Course Exam developed and administered by CSI Global Education Inc., under the name given to it on September 28, 2009, as well as any prior or subsequent exam whose scope and content are not substantially less than those of the exam in question;

"Canadian Securities Course Exam": the exam developed and administered by CSI Global Education Inc., under the name given to it on September 28, 2009, as well as any prior or subsequent exam whose scope and content are not substantially less than those of the exam in question;

"Branch Manager Advancement Exam": the exam developed and administered by the Canadian Retirement Income Distributors Association (CRIDA), under the name given to it on September 28, 2009, as well as any prior or subsequent exam whose scope and content are not substantially less than those of the exam in question;

"Sales Representative Advancement Exam": the exam developed and administered by the Canadian Retirement Income Distributors Association (CRIDA), under the name given to it on September 28, 2009, as well as any prior or subsequent exam whose scope and content are not substantially less than those of the exam in question;

"Eligible Foreign Candidate Course Exam": the exam developed and administered by CSI Global Education Inc., under the name given to it on September 28, 2009, as well as any prior or subsequent exam whose scope and content are not substantially less than those of the exam in question;

"Chief Compliance Officer Aptitude Exam": the exam developed and administered by F

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