The Canadian Securities Administrators are publishing for comment a proposed registration and prospectus exemption for certain capital accumulation plans.

The guidelines address many of the regulatory concerns that the CSA has about how plan members can get adequate information and tools to help them make informed investment decisions. “We believe it is appropriate to provide certain dealer registration and prospectus exemptions for trades in mutual funds that occur in tax-assisted capital accumulation plans, provided that there is compliance with the parts of the guidelines that substitute for receiving advice from a registrant, and prospectus disclosure,” the CSA says.

The proposed exemption would:

  • apply only to mutual fund securities;
  • harmonize the treatment of mutual funds and segregated funds as investments within a capital accumulation plan;
  • ensure that plan members receive information that is appropriate for them, about the mutual funds they can acquire through the plan;
  • require plan sponsors to provide certain information, tools and documents to plan members to enable informed decision making;
  • exempt mutual funds from the prospectus requirements for mutual funds sold to members of certain capital accumulation plans, provided that the funds comply with certain investment restrictions; and
  • remove existing barriers to trading mutual fund securities with members of capital accumulation plans where there is no valid regulatory reason for doing so.



“In most provinces, we expect to adopt the proposed exemption in the form of a blanket exemption from the dealer registration and the prospectus requirements for certain trades in mutual fund securities,” the CSA says. It is working on a harmonized national exemptions rule, which it expects to publish some time this year.

The proposed exemption will implement certain parts of the Guidelines for Capital Accumulation Plans, which were developed by the Joint Forum of Financial Market Regulators, and approved for publication by the CSA, the Canadian Council of Insurance Regulators, and the Canadian Association of Pension Supervisory Authorities. The guidelines apply to tax assisted capital accumulation plans such as defined contribution pension plans where plan members make investment choices, and group registered retirement savings plans.

In April 2001 the CSA published for comment Proposed Regulatory Principles for Capital Accumulation Plans, which received 44 submissions. The Joint Forum then developed detailed guidelines describing standards for operating certain plans, which were published for comment in April 2003, and received 26 written submissions. The Joint Forum also held 12 focus group sessions with 126 plan sponsors, service providers and plan members.

After considering the comments, and making a number of changes to the guidelines, the Joint Forum has today published the final guidelines, which were approved for publication by the CSA, CCIR, and CAPSA. The regulators expect that plan sponsors, and service providers would follow the guidelines by December 2005.

Comments are due by July 30.