Securities Law & Instruments



Notice of Minister of Finance Approval of Final Rule
Under the Securities Act and Amendment to
Regulation 1015 made under the Securities Act -
Rule 35-502 - Non -Resident Advisers


NOTICE OF MINISTER OF FINANCE APPROVAL OFFINAL RULE
UNDER THE SECURITIES ACT AND NOTICE OF AMENDMENT TO
REGULATION 1015 OF THE REVISED REGULATIONS OF ONTARIO, 1990
MADE UNDER THE SECURITIES ACT IN CONNECTION WITH OSC RULE 35-502

 

The Minister of Finance approved Rule 35-502 Non-Resident Advisers (the "Rule") on November 3, 2000. Previously, materials related to the Rule were published in the Bulletin on October 2, 1998, and June 23rd, 2000. The Commission adopted the Rule on September 12, 2000, and the Rule was published in final form on September 22, 2000. The Rule came into force on November 18, 2000.

The version of the Rule delivered to the Minister and published here differs immaterially from the version of the Rule published previously. The two changes were made during final proofreading of the Rule. These two immaterial changes are indicated in footnotes in Part 5 of the Bulletin where the final Rule is being published. These footnotes are solely for the purposes of identifying the changes and should not be interpreted as being part of the final Rule.

The Minister of Finance has also approved a regulation to amend Regulation 1015 of the Revised Regulations of Ontario, 1990 made under the Securities Act (the "Regulation") in connection with the Rule, which was filed as O. Reg. 601/00 on November 16, 2000, and will be published in the Ontario Gazette on December 2, 2000. The amendment to the Regulation came into force at the time that the Rule came into force on November 18, 2000.

The Rule and related regulation are published in Chapter 5 of the OSC Bulletin.

 

ONTARIO SECURITIES COMMISSION RULE 35-502
NON-RESIDENT ADVISERS
TABLE OF CONTENTS

PARTTITLE

PART 1 DEFINITIONS AND INTERPRETATION
1.1 Definitions
1.2Extended Meaning of Affiliates

PART 2INTERNATIONAL ADVISER APPLICANTS
2.1Completion of Form 3
2.2Completion of Form 4

PART 3INTERNATIONAL ADVISERS
3.1General Requirements
3.2Acquisition of an Interest in Another Registrant
3.3Record Keeping and Production of Records and Witnesses
3.4 Standards Ensuring Fairness
3.5Compensation of Partners, Officers or Representatives of
International Advisers
3.6Supervision of Accounts
3.7Holding of Client Assets
3.8Renewals of Registration
3.9Examinations
3.10Amendments to Registration
3.11Conducting an Audit at the Request of the Commission
3.12Disclosure of Status to Clients
3.13Disclosure of Status in Offering Documents

PART 4EXEMPTION FROM FINANCIAL STATEMENT PREPARATION AND FILING REQUIREMENTS
4.1Exemption from Financial Statement Preparation Requirements
and Filings
4.2Order Granting Exemption

PART 5EXEMPTION FROM REPORTING OF CERTAIN CHANGES
5.1Exemption from Reporting of Certain Changes under the Act
5.2Order Granting Exemption
5.3Exemption from Rule 35-503

PART 6RESTRICTED ADVISORY ACTIVITIES FOR INTERNATIONAL
ADVISERS
6.1Permitted Clients
6.2Indirect Advising
6.3Advising in Another Country
6.4Advising in Respect of Foreign Securities
6.5Limitation on Revenues

PART 7EXEMPTIONS FROM REGISTRATION
7.1Unsolicited Advising of not More than Five Clients in Canada
7.2Commodity Pool Programs
7.3Sub-Adviser for a Registrant
7.4Advising Funds Outside Ontario
7.5Advising Advisers to Funds Outside Ontario
7.6Advising Pension Funds of Affiliates
7.7Distributions to Existing Holders
7.8Existing Privately Placed Funds
7.9Funds Managed Under Prior Legislation
7.10Privately Placed Funds Offered Primarily Abroad
7.11Disclosure in Offering Documents

PART 8EXTRA-PROVINCIAL ADVISERS

8.1Registration in Another Province
8.2Change in Registration Status in Another Jurisdiction
8.3Counselling Officer Resident in Canada

PART 9SUBMISSION TO JURISDICTION AND APPOINTMENT OF AGENT FOR SERVICE OF PROCESS FORMS
9.1Submission to Jurisdiction
9.2 Disclosure of Submission to Jurisdiction to Clients
9.3Disclosure of Submission to Jurisdiction in Offering
Documents

PART 10EXEMPTION
10.1Exemption

APPENDIX A FORM OF SUBMISSION TO JURISDICTION AND APPOINTMENT OF AGENT FOR SERVICE OF PROCESS BY A NON-RESIDENT ADVISER

APPENDIX B
FORM OF SUBMISSION TO JURISDICTION AND APPOINTMENT OF AGENT FOR SERVICE OF PROCESS BY NON-RESIDENT PARTNERS, OFFICERS OR REPRESENTATIVES OF A NON-RESIDENT ADVISER

ONTARIO SECURITIES COMMISSION RULE 35-502
NON-RESIDENT ADVISERS

PART 1 DEFINITIONS AND INTERPRETATION

1.1 Definitions -
In this Rule

"book-based system" has the meaning ascribed to that term in National Instrument 81-102 Mutual Funds;

"Canadian security" means a security other than a foreign security;

"extra-provincial adviser" means a person or company that is registered or applying for registration as an adviser under the Act, other than an international adviser or international adviser applicant, and that does not have a place of business in Ontario with partners, officers or representatives resident in Ontario who are acting on its behalf in Ontario;

"foreign security" has the meaning ascribed to that term in subsection 204(1) of the Regulation;

"Form 3" and "Form 4" mean Form 3 or Form 4 to the Regulation, respectively;

"fund" means a mutual fund or a non-redeemable investment fund;

"international adviser applicant" means a person or company applying for registration as an international adviser under the Act;

"international adviser" means

(a)a person or company that has been granted registration as an international adviser (investment counsel, portfolio manager or securities adviser) under the Act, and

(b)a registrant whose registration is subject to the restrictions set out in former Rule In the Matter of Certain Advisers (1997), 20 OSCB 1217, as amended;

"manager" means the person or company the directs the business, operations or affairs of a fund;

"Ontario client" means a permitted client who is ordinarily resident in Ontario;

"permitted client" means one of the following clients:

1.A bank listed in Schedule I or II to the Bank Act (Canada), acting as principal or as agent for accounts fully managed by it.

2.A loan corporation or trust corporation registered under the Loan and Trust Corporations Act, acting as principal or as trustee or agent for accounts fully managed by it.

3.An insurance company licensed under the Insurance Act.

4.Each of a treasury branch, credit union or caisse populaire that, in each case, is authorized to carry on business in Ontario.

5.The Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada).

6.Her Majesty in right of Canada or of any jurisdiction.

7.A portfolio manager acting as principal or as agent for accounts fully managed by it.

8.A broker or investment dealer acting as principal or, as permitted by section 148 of the Regulation, as agent for accounts fully managed by it.

9.A pension fund that is regulated either by the Office of the Superintendent of Financial Institutions (Canada) or by a provincial pension commission, or a group of pension funds that are so regulated, if the pension fund has, or the group of pension funds have, net assets of at least $100 million, or its equivalent in another currency, provided that, in determining net assets, the liability of the pension fund for future pension payments shall not be included.

10.A registered charity under the ITA with assets not used directly in charitable activities or administration of at least $5 million or its equivalent in another currency.

11.An individual who has a net worth of at least $5 million or its equivalent in another currency, excluding the value of his or her principal residence, as certified by the individual.

12.A person or company that is entirely owned, legally and beneficially, by an individual or individuals referred to in paragraph 11, who hold its or their ownership interest in the person or company directly or through a trust the trustee of which is a trust company registered under the Loan and Trust Corporations Act.

13.A corporation that has shareholders' equity of at least $100 million on a consolidated basis or its equivalent in another currency.

14.A fund that distributes its securities in Ontario, if the manager of the fund

(a)is ordinarily resident in a jurisdiction and is registered under the Act as a portfolio manager, broker, investment dealer or mutual fund dealer, or is registered under Canadian securities legislation other than the Act in an equivalent category of registration, and

(b)is a party to the contract under which the international adviser provides investment advice or portfolio management services to the fund.

15.A fund that distributes its securities in Ontario only to persons or companies referred to in paragraphs 1 through 13 or described in section 7.7 or 7.8;

"portfolio adviser" means a person or company that provides investment advice or portfolio management services under a contract with a fund or with the manager of the fund; and

"submission to jurisdiction and appointment of agent for service of process form" means, for an international adviser, the form set out in Appendix A to this Rule and, for a partner, officer or representative of an international adviser, the form set out in Appendix B to this Rule.

1.2Extended Meaning of Affiliates -
An international adviser that is a partnership is considered to be affiliated with another partnership or with a company, and an international adviser that is a company is considered to be affiliated with a partnership, if the partnerships, or the partnership and the company, would be affiliates of each other under the definition of "affiliated companies" in the Act, if that definition and the related definitions of "controlled companies" and "subsidiary companies" were each read as if references to a "company" were references to a "partnership".


PART 2INTERNATIONAL ADVISER APPLICANTS

2.1Completion of Form 3

(1)An international adviser applicant shall complete and execute a Form 3 and shall indicate inresponse to question 1 of Form 3 that the applicant is applying for registration as an international adviser.

(2)An international adviser applicant is not required to complete item 3 of Form 3.

(3)An international adviser applicant is not required to complete item 11 of Form 3, other than item 11A(b).

(4)An international adviser applicant, in responding to items 9 and 10 of Form 3, need only list and provide information about its partners, officers or representatives who will be acting on its behalf in respect of the business of the international adviser applicant in Ontario.


2.2Completion of Form 4 - A person that applies for registration as a partner, officer or representative, or that seeks approval as a partner, officer, or representative , listed in the international adviser’s Form 3 pursuant to section 2.1(4) shall complete and execute a Form 4, unless the information required by Form 4 has previously been filed by the applicant and the information as previously filed is current and correct as of the date the of application, but is not required to complete items 7, 8, 10, 20 and 21 of Form 4.

PART 3INTERNATIONAL ADVISERS

3.1General Requirements

(1)No registration or renewal of registration shall be granted to an international adviser applicant or an international adviser unless the international adviser applicant or the international adviser has complied with the requirements of this Rule and any applicable requirements of the Regulation at the time of the granting of the registration or the renewal of registration.

(2)An international adviser and each of its partners, officers or directors registered under the Act shall comply with the requirements of this Rule and any other applicable requirements of Ontario securities law.

(3)The Commission may prescribe conditions of registration for an international adviser or its registered partners, officers or representatives, or for a group of international advisers or group of its or their registered partners, officers or representatives, that are in lieu of some or all of the conditions of registration set forth in this Rule, if the Commission gives prior notice of the proposed conditions to those persons or companies affected and affords them an opportunity to be heard and the Commission publishes notice in a publication published by the Commission of each instance when it so prescribes.

3.2Acquisition of an Interest in Another Registrant - An international adviser is subject to the requirements of section 104 of the Regulation or Part 4 of Rule 33-503 Change of Registration Information when it becomes effective.

3.3Record Keeping and Production of Records and Witnesses

(1)An international adviser is subject to the requirements relating to record keeping set out in subsections 113(1), (2) and (4) of the Regulation.

(2)If the laws of the foreign jurisdiction in which the books, records or documents referred to in subsection 19(3) of the Act of an international adviser are located prohibit production of the books, records or documents in Ontario without the consent of the relevant client, an international adviser shall, upon a request by the Commission under subsection 19(3) of the Act

(a)so advise the Commission; and

(b)use its best efforts to obtain the client's consent to the production of the books, records or documents.

(3)At the request of the Director, the Commission or a person appointed by the Commission to make an investigation under the Act relating to the international adviser's activities in Ontario, an international adviser shall

(a)immediately produce in Ontario, at the international adviser's expense, appropriate persons in its employ as witnesses to give evidence on oath or otherwise;

(b)if the appropriate persons referred to in paragraph (a) are not in its employ, use its best efforts immediately to produce in Ontario, at the international adviser's expense, the persons to give evidence on oath or otherwise, subject to the laws of the foreign jurisdiction that are otherwise applicable to the giving of evidence; and

(c)if the laws of a foreign jurisdiction that are otherwise applicable to the giving of evidence prohibit the international adviser or the persons referred to in paragraph (a) from giving the evidence without the consent of the relevant client

(i)so advise the Commission or the person making the request, and

(ii)use its best efforts to obtain the client's consent to the giving of the evidence.

3.4Standards Ensuring Fairness - An international adviser shall adopt and maintain standards directed to ensuring fairness in the allocation of investment opportunities among the Ontario clients of the investment counsel and a copy of the standards so established shall be furnished to each Ontario client of the international adviser and filed with the Commission.

3.5Compensation of Partners, Officers or Representatives of International Advisers - An international adviser shall not compensate its partners, officers or representatives in a manner that is based upon the value or the volume of the transactions initiated for the Ontario clients of the international adviser.

3.6Supervision of Accounts - Subsections 115(3) and (4) of the Regulation apply to an international adviser.

3.7Holding of Client Assets

(1)Subject to subsections (2) and (3), an international adviser shall ensure that the securities and money of an Ontario client are held

(a)by the Ontario client; or

(b)by a custodian or sub-custodian

(i)that meets the requirements prescribed for acting as a custodian or sub-custodian of a mutual fund in National Instrument 81-102, and

(ii)that is subject to the agreement announced by the Bank for International Settlements on July 1, 1988 concerning international convergence of capital measurement and capital standards.

(2)An international adviser or an affiliate of the international adviser that holds the securities or money of an Ontario client as custodian or sub-custodian shall hold the securities and money in compliance with sections 116, 117, 118 and 119 of the Regulation.

(3)The securities of an Ontario client may be deposited with or delivered to a depository or clearing agency that is authorized to operate a book-based system.

3.8Renewals of Registration - Sections 130 to 133 of the Regulation apply to an international adviser and each of its registered partners, officers and representatives.

3.9Examinations - Section 134 of the Regulation applies to an international adviser and each of its registered partners, officers and representatives.

3.10Amendments to Registration - Sections 135 and 136 of the Regulation apply to an international adviser and each of its registered partners, officers and representatives.

3.11Conducting an Audit at the Request of the Commission - Section 145 of the Regulation applies to an international adviser.

3.12Disclosure of Status to Clients - An international adviser shall deliver to an Ontario client, before acting as an adviser to the Ontario client, a statement in writing disclosing

(a)to the extent applicable, that there may be difficulty enforcing any legal rights the Ontario client may have against the international adviser because

(i)the international adviser is ordinarily resident outside Canada and all or a substantial portion of its assets are situated outside Canada, and

(ii)if applicable, that the laws of the foreign jurisdiction in which the books, records and documents referred to in subsection 19(3) of the Act of the international adviser are located prevent the production of those books, records and documents in Ontario; and

(b)that the international adviser is not fully subject to the requirements of the Act and the regulations concerning proficiency, capital, insurance, record keeping, segregation of funds and securities and statements of account and portfolio.

3.13Disclosure of Status in Offering Documents - A prospectus filed in Ontario for a fund whose portfolio adviser is an international adviser, or whose portfolio adviser receives investment advice or portfolio management services from an international adviser, shall disclose the matters referred to in section 3.12.

PART 4EXEMPTION FROM FINANCIAL STATEMENT PREPARATION AND FILING REQUIREMENTS

4.1Exemption from Financial Statement Preparation Requirements and Filings -
An application under section 147 of the Act for an exemption from the requirement of subsection 21.10(3) of the Act that registrants file annual audited financial statements may consist of the following sentence if the international adviser applicant or the international adviser is not applying for registration, and is not registered, in any category of registration in addition to registration as a international adviser and if the application is made by an international adviser applicant concurrently with the filing of an application for registration or by an international adviser before or on the first anniversary of registration as an adviser after the date this Rule comes into force:

"We hereby apply for an exemption from the requirement of the Act that registrants file annual audited financial statements. We understand that this exemption will terminate if we become a registrant in another category of registration under the Act."

4.2Order Granting Exemption - The issuance by the Director of a certificate of registration or renewal of registration to the international adviser applicant or to the international adviser is evidence of the approval of the application made under section 4.1, if that section has been complied with, unless the exemption request is denied in writing by the Director.


PART 5EXEMPTION FROM REPORTING OF CERTAIN CHANGES

5.1Exemption from Reporting of Certain Changes under the Act -
An application under subsection 33(4) of the Act for an exemption from the requirement of subsection 33(2) of the Act that advisers notify the Director of the changes in information required to be reported under that subsection, to the extent that the change required to be reported relates to information that was not required to be furnished to the Director upon the filing of the application for registration by an international adviser, may consist of the following sentence if the international adviser applicant or the international adviser is not applying for registration, and is not registered, in any category of registration in addition to registration as a international adviser and if the application is made by an international adviser applicant concurrently with the filing of an application for registration or by an international adviser before or concurrently with the first anniversary of registration as an adviser made after the date this Rule comes into force:

"Subsection 33(2) of the Ontario Securities Act requires advisers to notify the Director of changes in the information required to be reported by that subsection. We hereby apply for an exemption from these requirements to the extent that the change relates to information that was not required to be furnished to the Director upon the filing of our application for registration as an international adviser. We understand that this exemption will terminate if we become a registrant in another category of registration under the Act."

5.2Order Granting Exemption - The issuance by the Director of a certificate of registration or renewal of registration to the international adviser applicant or the international adviser is evidence of the approval of the application made under section 5.1, if that section has been complied with, unless the exemption request is denied in writing by the Director.

5.3Exemption from Rule 35-503 - Despite Rule 35-503 Change of Registration Information, an international adviser is not required to file an amendment to its registration or to notify the Director of a notifiable change relating to information that was not required to be furnished to the Director upon the filing of the applicant's application for registration as an international adviser.

PART 6RESTRICTED ADVISORY ACTIVITIES FOR INTERNATIONAL ADVISERS

6.1Permitted Clients

(1)An international adviser shall only act as an adviser in Ontario for permitted clients.

(2)In determining whether a permitted client that is a pension fund, group of pension funds, registered charity or corporation meets the financial requirements referred to in paragraphs 9, 10 and 13 of the definition of a "permitted client" in section 1.1, the international adviser may rely on the most recent audited financial statements of the permitted client.

(3)The financial requirements referred to in paragraphs 9, 10, 11 and 13 of the definition of the term "permitted client" in section 1.1 are only required to be satisfied at the time the international adviser first acts as an adviser for the client.

(4)Despite subsection (2), if an international adviser was acting as an adviser for a client on June 1, 1992 and has acted for that client continuously since that date, the financial requirements referred to in section 1.1 may be satisfied as of June 1, 1992.

6.2Indirect Advising -
An international adviser shall not act as an adviser in Ontario to a person or company that is not a permitted client indirectly, by providing investment advice or portfolio management services through another person or company, other than a person or company referred to in paragraphs 1, 2, 7 or 8 of the definition of "permitted client" in section 1.1 or except as permitted by Part 7.

6.3Advising in Another Country - An international adviser shall not act as an adviser in Ontario for a type of security unless it is engaged in the business of an adviser in a foreign jurisdiction for that type of security.

6.4Advising in Respect of Foreign Securities - An international adviser shall not act as an adviser inOntario for Canadian securities unless this activity is incidental to its acting as an adviser in Ontario for foreign securities. Whether the activity can be considered to be incidental shall be evaluated from the point of view of the adviser, on an account by account basis, and not the client.

6.5Limitation on Revenues - No more than 25 per cent of the aggregate consolidated gross revenues from advisory activities of an international adviser and its affiliates or affiliated partnerships, in any financial year of the international adviser, shall arise from the international adviser and its affiliates or affiliated partnerships acting as advisers for clients in Canada.


PART 7EXEMPTIONS FROM REGISTRATION

7.1Unsolicited Advising of not More than Five Clients in Canada

(1)The adviser registration requirement does not apply to a person or company, not ordinarily resident in Ontario, if

(a)it, and its affiliates or affiliated partnerships that are not ordinarily resident in Ontario, did not act as an adviser during the preceding 12 months for more than five clients in Canada;

(b)it acts as an adviser in Ontario in reliance upon the exemption provided by this section solely for permitted clients, other than a fund;

(c)it does not solicit clients in Ontario;

(d)its acting as an adviser in Ontario for Canadian securities is incidental to its acting as an adviser in Ontario for foreign securities;

(e)before advising an Ontario client, it notifies the Ontario client that it is not registered as an adviser in Ontario; and

(f)all assets of its Ontario clients are held by persons or companies that meet the requirements of paragraph 3.7(1) or are referred to in subsection 3.7(3).

(2)For purposes of paragraph (1)(a), in determining if a person or company has acted as an adviser for more than five clients in Canada

(a)two or more persons who are or intend to become the joint registered owners of securities or an account in respect of which the person or company acts as an adviser are counted as one client;

(b)a person or company acting as trustee or agent for more than one fully managed account is counted as one client;

(c)clients referred to in sections 7.2 through 7.9 are excluded; and

(d)clients who would be excluded by sections 7.2 through 7.9 if they were residents of Ontario are excluded.

7.2Commodity Pool Programs - The adviser registration requirement does not apply to a person or company, not ordinarily resident in Ontario, that is registered under the Commodity Futures Act, in connection with that person or company acting as a portfolio adviser to a mutual fund that is subject to National Instrument 81-104 Commodity Pools or to a non-redeemable investment fund that would be subject to that National Instrument if it were a mutual fund.

7.3Sub-Adviser for a Registrant

(1)The adviser registration requirement does not apply to a person or company, not ordinarily resident in Ontario, in connection with that person or company acting as an adviser for an investment counsel or portfolio manager, or for a broker or investment dealer acting as a portfolio manager as permitted by subsection 148(1) of the Regulation, if

(a)the obligations and duties of the person or company so acting as an adviser are set out in a written agreement with the registrant;

(b) the registrant contractually agrees with its clients on whose behalf investment advice is or portfolio management services are to be provided to be responsible for any loss that arises out of the failure of the person or company so acting as an adviser

(i)to exercise the powers and discharge the duties of its office honestly, in good faith and in the best interests of the registrant and each client of the registrant for whose benefit the advice is or portfolio management services are to be provided, or

(ii)to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances;

(c)the registrant cannot be relieved by its clients from its responsibility for loss under paragraph (b); and

(d)the person or company so acting as an adviser, if a resident of a jurisdiction, is registered as an adviser in the jurisdiction.

7.4Advising Funds Outside Ontario - The adviser registration requirement does not apply to a person or company, not ordinarily resident in Ontario, in connection with that person or company acting as a portfolio adviser to a fund that does not have an address in Ontario, if

(a)advice to the fund is given and received or portfolio management services are provided outside of Ontario; and

(b)the person or company is registered in a jurisdiction in a category of registration that permits the person or company to provide discretionary portfolio management services or as a broker or investment dealer acting as a portfolio manager as permitted by a provision similar to subsection 148(1) of the Regulation.

7.5Advising Advisers to Funds Outside Ontario - The adviser registration requirement does not apply to a person or company, not ordinarily resident in Ontario, in connection with that person or company acting as an adviser to a portfolio adviser to a fund exempted from the adviser registration requirements under section 7.4, if

(a)the obligations and duties of the person or company are set out in a written agreement with the portfolio adviser to the fund;

(b)the portfolio adviser to the fund contractually agrees with the fund to be responsible for any loss to the fund that arises out of the failure of the person or company

(i)to exercise the powers and discharge the duties of its office honestly, in good faith and in the best interests of the fund, or

(ii)to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances;

(c)the portfolio adviser to the fund cannot be relieved by the fund or its securityholders fromits responsibility for loss under paragraph (b); and

(d)the person or company, if a resident of a jurisdiction, is registered as an adviser in the jurisdiction.

7.6Advising Pension Funds of Affiliates - The adviser registration requirement does not apply to a person or company, not ordinarily resident in Ontario, in connection with that person or company acting as an adviser for a pension fund sponsored by an affiliate of the person or company for the benefit of the employees of the affiliate or affiliates of the affiliate.

7.7Distributions to Existing Holders - The adviser registration requirement does not apply to a person or company, not ordinarily resident in Ontario, in connection with that person or company acting as a portfolio adviser to a fund, if the fund

(a)does not have an address in Canada;

(b)is not organized under the laws of Canada or a jurisdiction; and

(c)only distributes securities to a person or company in Ontario in a distribution to which the prospectus requirements of the Act would apply but for the availability of one or more of the exemptions contained in

(i)Rule 81-501 Mutual Fund Reinvestment Plans,

(ii)subclause 72(1)(f)(iii) of the Act, or

(iii)in a transaction in which securities of the fund are acquired by substantially all holders of securities of a class of the fund or another fund that has the same portfolio adviser.

7.8Existing Privately Placed Funds - The adviser registration requirement does not apply to a person or company, not ordinarily resident in Ontario, in connection with that person or company acting as a portfolio adviser to a fund, if the fund

(a)has sold its securities in Ontario in a distribution to which the prospectus requirements of the Act would apply but for the availability of one or more of the exemptions contained in clause 72(1)(a) or (c) of the Act, in clause 72(1)(d) or (p) of the Act subject to compliance with the requirements of Rule 45-501 Prospectus Exempt Distributions, or in subsection 1.2(a) of Rule 32-503 Registration and Prospectus Exemption for Trades by Financial Intermediaries in Mutual Fund Securities to Corporate Sponsored Plans; and

(b)only distributes securities to a person or company in Ontario in a distribution to which the prospectus requirements of the Act would apply but for the availability of one or more of the exemptions contained in

(i)Rule 81-501 Mutual Fund Reinvestment Plans,

(ii)subclause 72(1)(f)(iii) of the Act, or

(iii)in a transaction in which securities of the fund are acquired by substantially all holders of securities of a class of the fund or another fund that has the same portfolio adviser.

7.9Funds Managed Under Prior Legislation - The adviser registration requirement does not apply to a person or company, not ordinarily resident in Ontario, in connection with that person or company acting as a portfolio adviser to a fund, if

(a)the person or company or an affiliate of the person or company has acted continuouslyas a portfolio adviser to the fund since before May 1, 1967;

(b)securities of the fund have continuously been distributed in Ontario since May 1, 1967 by means of a prospectus prepared and filed in accordance with the Act or its predecessor legislation; and

(c)the person or company has not been registered as an adviser.

7.10Privately Placed Funds Offered Primarily Abroad - The adviser registration requirement does not apply to a person or company, not ordinarily resident in Ontario, in connection with the person or company acting as a portfolio adviser to a fund, if the securities of the fund are

(1)primarily offered outside of Canada;

(2)only distributed in Ontario through one or more registrants; and

(3)distributed in Ontario in reliance upon an exemption from the prospectus requirements of the Act.

7.11Disclosure in Offering Documents - A prospectus filed in Ontario for a fund whose portfolio adviser is relying upon an exemption from the adviser registration requirements provided by this Part, or whose portfolio adviser receives investment advice or portfolio management services from a person or company that relies upon an exemption from the adviser registration requirements provided by this Part, shall include disclosure that

(a)if the person or company is advising a registrant in reliance on the exemption in section 7.3 or a portfolio adviser in reliance upon the exemption in section 7.5, the registrant or portfolio adviser has responsibility for the investment advice given or portfolio management services provided by the person or company; and

(b)to the extent applicable, there may be difficulty in enforcing any legal rights against the person or company because it is resident outside Canada and all or a substantial portion of its assets are situated outside Canada.


PART 8EXTRA-PROVINCIAL ADVISERS

8.1Registration in Another Province -
A person or company applying for registration as an adviser under the Act that is an extra-provincial adviser shall be registered under securities legislation of the jurisdiction in which the head office or principal place of business of the person or company is located in a category of registration that permits the person or company to carry on the activities in that jurisdiction that registration as an adviser under the Act would permit the person or company to carry on in Ontario.

8.2Change in Registration Status in Another Jurisdiction - An extra-provincial adviser shall inform the Director immediately upon the extra-provincial adviser becoming aware that the registration of the extra-provincial adviser in another jurisdiction

(a)is not being renewed, is lapsing or is being suspended, cancelled, revoked or is becoming restricted by the imposition of any terms or conditions; or

(b)is the subject of an investigation by a securities regulatory authority other than the Commission.

8.3Counselling Officer Resident in Canada - An extra-provincial adviser shall have at least one officer resident in Canada who is registered as a counselling officer in accordance with section 3.2 of Rule 31-502 Proficiency Requirements for Registrants.

PART 9SUBMISSION TO JURISDICTION AND APPOINTMENT OF AGENT FOR SERVICE OF PROCESSFORMS

9.1Submission to Jurisdiction -
An international adviser, an extra-provincial adviser and each partner, officer or representative of an international adviser or an extra-provincial adviser seeking registration under the Act shall file as part of his, her or its application for registration an executed submission to jurisdiction and appointment of agent for service of process form.

9.2Disclosure of Submission to Jurisdiction to Clients - An international adviser or an extra-provincial adviser shall deliver to an Ontario client, before acting as an adviser to the Ontario client, a statement in writing disclosing the name and address of the agent for service of process of the international adviser or extra-provincial adviser in Ontario appointed by the international adviser or extra-provincial adviser or that this information is available from the Commission.

9.3Disclosure of Submission to Jurisdiction in Offering Documents - A prospectus filed in Ontario for a fund whose portfolio adviser is an international adviser or an extra-provincial adviser, or whose portfolio adviser receives investment advice or portfolio management services from an international adviser or an extra-provincial adviser, shall disclose the matters referred to in section 9.2.

PART 10EXEMPTION

10.1Exemption -
The Director may grant an exemption to this Rule, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption.

ONTARIO SECURITIES COMMISSION RULE 35-502
NON-RESIDENT ADVISERS

APPENDIX A

FORM OF SUBMISSION TO JURISDICTION AND APPOINTMENT OF AGENT
FOR SERVICE OF PROCESS BY A NON-RESIDENT ADVISER

1.Name of the applicant (the "Applicant"):

2.Jurisdiction of incorporation or organization of the Applicant:

3.Name of agent for service of process (the "Agent"):

4.Address for service of process of the Agent in Ontario:

5.The Applicant designates and appoints the Agent at the address stated above as its agent upon whom may be served any notice, pleading, subpoena, summons or other process in any action, investigation or administrative, criminal, quasi-criminal, penal or other proceeding (each, a "Proceeding") arising out of or relating to or concerning the Applicant's activities as an adviser in Ontario, and irrevocably waives any right to raise as defence in any Proceeding any alleged lack of jurisdiction to bring that Proceeding.

6.The Applicant irrevocably and unconditionally submits to the non-exclusive jurisdiction of the judicial, quasi-judicial and administrative tribunals of Ontario and any administrative proceeding in Ontario, in any Proceeding arising out of or related to or concerning the Applicant's activities as an adviser in Ontario.

7.Until six years after the Applicant ceases to be registered as an adviser in Ontario, the Applicant shall file

(a)a new Submission to Jurisdiction and Appointment of Agent for Service of Process in this form at least 30 days before termination for any reason of this Submission to Jurisdiction and Appointment of Agent for Service of Process and immediately after the death or incapacity of the Agent or the Agent ceasing to carry on business; and

(b)an amended Submission to Jurisdiction and Appointment of Agent for Service of Process at least 30 days before any change in the name or address of the Agent from that set forth above.

8.This Submission to Jurisdiction and Appointment of Agent for Service of Process is governed by and construed in accordance with the laws of Ontario.


Dated:



[Name of Applicant]



By:
(Signature of authorized signatory)



(Name and title of authorized
signatory)
Acceptance


The undersigned accepts the appointment as agent for service of process of (Insert name of Applicant) under the terms and conditions of the foregoing Submission to Jurisdiction and Appointment of Agent for Service of Process and agrees to advise the Commission immediately if the undersigned is unable to deliver to the Applicant a copy of a document served on the undersigned as Agent.


Dated:





(Signature of Agent or authorized signatory)



(Name and Title of Authorized Signatory)

 

ONTARIO SECURITIES COMMISSION RULE 35-502
NON-RESIDENT ADVISERS

APPENDIX B

FORM OF SUBMISSION TO JURISDICTION AND APPOINTMENT OF AGENT
FOR SERVICE OF PROCESS BY NON-RESIDENT PARTNERS, OFFICERS OR
REPRESENTATIVES OF A NON-RESIDENT ADVISER

1.Name of the adviser (the "Registrant"):



2.Jurisdiction of incorporation or organization of the Registrant:

3.Name and address of person filing this form (the "Filing Person"):

4.Name of agent for service of process (the "Agent"):

5.Address for service of process of the Agent in Ontario:

6.The Filing Person designates and appoints the Agent at the address of the Agent stated above as its agent upon whom may be served a notice, pleading, subpoena, summons or other process in any action, investigation or administrative, criminal, quasi-criminal, penal or other proceeding (each, a "Proceeding") arising out of or relating to or concerning the Filing Person's activities in Ontario as a registrant under the Securities Act (Ontario) (the "Act"), and irrevocably waives any right to raise as a defence in any Proceeding any alleged lack of jurisdiction to bring that Proceeding.

7.The Filing Person irrevocably and unconditionally submits to the non-exclusive jurisdiction of the judicial, quasi-judicial and administrative tribunals of Ontario and any administrative proceeding in Ontario, in any Proceeding arising out of or related to or concerning the Filing Person's activities in Ontario as a registrant under the Act.

8.Until the earlier of the termination of the Filing Person's position as a partner, officer or representative of the Registrant and six years after the Registrant ceases to be a registrant under the Act, the Filing Person shall file

(a)a new Submission to Jurisdiction and Appointment of Agent for Service of Process in this form at least 30 days prior to termination for any reason of this Submission to Jurisdiction and Appointment of Agent for Service of Process and immediately after the death or incapacity of the Agent or the Agent ceasing to carry on business; and

(b)an amended Submission to Jurisdiction and Appointment of Agent for Service of Process at least 30 days before any change in the name or address of the Agent as set forth above.

9.This Submission to Jurisdiction and Appointment of Agent for Service of Process is governed by and construed in accordance with the laws of Ontario.

Dated:





(Signature of Filing Person)



(Name of Filing Person)

Acceptance

The undersigned accepts the appointment as agent for service of process of (Insert name of Filing Person) pursuant to the terms and conditions of the foregoing Submission to Jurisdiction and Appointment of Agent for Service of Process and agrees to advise the Commission immediately if the undersigned is unable to deliver to the Filing Person a copy of a document served on the undersigned as Agent.



Dated:




(Signature of Agent or authorized signatory)




(Name and title of authorized signatory)