Final Rule(effective January 1, 1997): OSC Rule - 32-503 - Registration and Prospectus Exemption for Trades by Financial Intermediaries in Mutual Fund Securities to Corporate Sponsored Plans
Final Rule(effective January 1, 1997): OSC Rule - 32-503 - Registration and Prospectus Exemption for Trades by Financial Intermediaries in Mutual Fund Securities to Corporate Sponsored Plans
ONTARIO SECURITIES COMMISSION RULE 32-503
REGISTRATION AND PROSPECTUS EXEMPTION FOR TRADES
BY FINANCIAL INTERMEDIARIES IN MUTUAL FUND
SECURITIES TO CORPORATE SPONSORED PLANS(1)
PART 1 REGISTRATION AND PROSPECTUS EXEMPTION FOR CERTAIN TRADES BY FINANCIAL INTERMEDIARIES(2) (3)
1.1 Registration Exemption - Up to and including March 31, 1998(4), section 25 of the Act does not apply to a trade by a financial intermediary in
(a) a security of a mutual fund, if the security is sold to a pension plan, deferred profit sharing plan, retirement savings plan or other similar capital accumulationplan maintained by the sponsor of the plan for its employees and the employees deal only with the sponsor in respect of their participation in the plan and thepurchase of the security by the plan(5), or
(b) a security of a mutual fund that
(i) is administered by a trust corporation registered under the Loan and Trust Corporations Act,
(ii) consists of a pool of funds that,
(A) results from, and is limited to, the combination or commingling of funds of pension or other superannuation plans registered under the ITA(6), and
(B) is established by or related to persons or companies that are associates or affiliates of or that otherwise do not deal at arm's length with the promoters of themutual fund except the trust corporation that administers the fund, and
(iii) is managed, in whole or in part, by a person who is registered or who is exempt from registration under the Act(7).(8) (9)
1.2 Prospectus Exemption(10) - Up to and including March 31, 1998, section 53 of the Act does not apply to a trade in
(a) a security of a mutual fund, if the security is sold to a pension plan, deferred profit sharing plan, retirement savings plan or other similar capital accumulationplan maintained by the sponsor of the plan for its employees and the employees deal only with the sponsor in respect of their participation in the plan and thepurchase of the security by the plan, or
(b) a security of a mutual fund that
(i) is administered by a trust corporation registered under the Loan and Trust Corporations Act,
(ii) consists of a pool of funds that,
(A) results from, and is limited to, the combination or commingling of funds of pension or other superannuation plans registered under the ITA, and
(B) is established by or related to persons or companies that are associates or affiliates of or that otherwise do not deal at arm's length with the promoters of themutual fund except the trust corporation that administers the fund, and
(iii) is managed, in whole or in part, by a person who is registered or who is exempt from registration under the Act.
PART 2 EFFECTIVE DATE
2.1 Effective Date - Unless otherwise required by section 143.4 of the Act, this Rule comes into force on January 1, 1997.
1. The Rule is derived from the Blanket Ruling In the Matter of Certain Amendments to Regulation 1015 of the Revised Regulations of Ontario 1990 MadeUnder the Securities Act (1994), 17 OSCB 5517 (the "Deemed Rule"), now a deemed rule. The title has been changed to be more descriptive of the reliefprovided.
2. A general definition rule has been published. It contains definitions of certain terms used in more than one rule. The proposed general definition rule alsoprovides, among other things, that terms used in a rule and defined in section 1 of the Securities Act or subsection 1(2) of the Regulation have the respectivemeaning given to them in the Securities Act or Regulation, as appropriate.
3. The term "financial intermediary" is defined in the general definition rule as having "the meaning ascribed to that term in subsection 204(1) of theRegulation".
4. The Deemed Rule expires on December 31, 1996. We have inserted a sunset provision of March 31, 1998 into this Rule by referencing that date in section1.1 and in section 1.2.
5. The Deemed Rule refers to clause 209(1)(g) of the Regulation. For user friendliness, we have set out the wording of that section here. We have deleted thereference to "trading as principal or agent" as being unnecessary and replaced the reference to "shares or units" with "a security".
6. The term "ITA" is defined in the general definition rule as meaning "the Income Tax Act (Canada)".
7. The Deemed Rule refers to paragraph 14(h) of the Regulation as that paragraph read on June 29, 1987. For user friendliness, we have set out the wording ofthat paragraph here. References to a "trust company" have been changed to a "trust corporation".
0 The Deemed Rule exempts financial intermediaries from the requirements of subsection 206(1) of the Regulation. This relief is not required under the Rulebecause the Rule provides an exemption from section 25 of the Act.
9. The Deemed Rule provides that clause 25(1)(b) of the Act does not apply to a trade by a financial intermediary of the type described in clause 209(1)(g) ofthe Regulation or paragraph 14(h) of the Regulation as the paragraph read on June 29, 1987. We have deleted this provision as it is covered by the exemption insubsection 1.1(1) above.
10. The Deemed Rule refers to clause 209(1)(g) and paragraph 14(h) of the Regulation. For user friendliness, we have set out the wording of that clause andparagraph here.