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On May 8, 2014, the Staff of the Investment Funds Branch of the Ontario Securities Commission (Staff) released a notice setting out recommendations based on their observations from a targeted continuous disclosure review of the fees and expenses disclosure practices of investment funds.

Staff conducted a targeted, continuous disclosure review of the fees and expenses disclosure practices of a sample of 18 fund managers offering various types of investment funds, including conventional mutual funds, exchange-traded funds and closed-end funds.

Recommendations

Staff made the following recommendations:

1.  Transparency in Disclosure of Management Fees and Expenses

  • Prospectus and continuous disclosure documents should disclose the specific services that the fund manager provides to the fund in consideration of the management fees and the types of expenses charged to the fund as operating expenses. General “catch all” terminology should be avoided.
  • The prospectus should provide details sufficient for investors to clearly distinguish the types of expenses, in particular the types of administrative and operating expenses, that are covered by management fees from those that are covered by operating expenses. Investors should not have to refer to the management or trust agreement for the information.
  • Fund managers should clearly describe the major services paid for out of the management fees in their funds’ MRFPs, as well as provide the required line items in the funds’ financial statements.  Relevant and descriptive line items, in addition to the mandated line items, should be used.

2.  Transparency in Disclosure of Expense Allocation

On January 16, 2014, the Ontario Securities Commission (OSC) released proposed amendments to corporate governance disclosure requirements (Proposed Amendments).

The Proposed Amendments follow on a consultation paper released by the OSC in July, 2013 and a subsequent public roundtable discussion regarding the paper.  A transcript of the roundtable discussion was also released.

The OSC indicated

On December 11, 2013, The Honourable James Moore, Minister of Industry, announced the launch of a public consultation on the Canada Business Corporations Act (CBCA) to help identify ways in which the CBCA can better promote important corporate governance policy objectives.

The government listed the following issues that have been identified for review as

The CSA announced further changes to NI 31-103 in order to streamline and increase efficiency, with comments due by March 5, 2014.    These changes include the following:

  • Providing guidance on proficiency requirements for those individuals applying as an associate advising representative or as an advising representative
  • Providing guidance on the experience required of a chief

On November 7, 2013, the Ontario Securities Commission (OSC) published its 2013 Annual Summary Report for Dealers, Advisers and Investment Fund Managers.  It contained, among other matters, information specific to investment fund managers (IFMs) including current trends in deficiencies and suggested practices to address them.

The deficiencies noted by the OSC with respect to

On September 23, 2013, the Ontario Securities Commission announced a roundtable to discuss the OSC Staff Consultation Paper 58-401 Disclosure Requirements Regarding Women on Boards and in Senior Management.   The roundtable will take place on Wednesday October 16th, 2013 from 9:00 a.m. to 11:00 a.m. at the OSC’s offices.  It will be hosted by

The notice sets out guidance from staff of the OSC’s Investment Funds Branch based on a targeted continuous disclosure review of the advertising and marketing materials (including presentations, internet ads, social media, radio ads, email blasts and green sheets) of publicly offered investment funds.

The notice provides guidance on the definition of sales communication, the

The Investment Funds Branch of the Ontario Securities Commission released a new edition of The Investment Funds Practitioner on May 23, 2013.  The Practitioner provides an overview of recent issues arising from applications for discretionary relief, prospectuses and continuous disclosure documents of investment funds.  The May 2013 Practitioner includes commentary on the following topics:

  • terms

The Canadian Securities Administrators (CSA) recently released discussion paper 81-407 which examines the mutual fund fee structure in Canada.  The paper provides an overview of the roles of market participants in the mutual fund industry and the current mutual fund fee structure, identifies investor protection and fairness issues arising from the current fee structure,

The Ontario Securities Commission’s Investment Funds Branch released its latest Investment Fund Practitioner on November 8, 2012.   It provides an overview of recent issues relating to investment fund filings with the OSC including, among others, the following guidance:

  • Bulleted placeholders are not appropriate in place of certain material information even in preliminary prospectuses.
  • When there