The Mutual Fund Dealers Association has extended the transition period for the use of personal corporations in some provinces, but not Alberta and New Brunswick.

It is also suspending a rule regarding related-member guarantees.

In a notice, the MFDA says the transition period for the personal corporation rule was to expire on March 1. The MFDA board of directors has approved an extension of the suspension period for the rule to Dec. 31, 2006.

Earlier, the Nova Scotia Securities Commission issued a notice regarding the new transition period, allowing MFDA members to pay remuneration directly to a corporation provided that the corporation does not trade or advise in securities. The notice says that members and reps registered in Ontario, British Columbia, Saskatchewan and Nova Scotia are reminded that as a condition of relying on the suspension of the rule they must continue to comply with the requirements regarding paying commissions to non-registered entities.

The MFDA also notes that regulators in Alberta and New Brunswick have advised the association that they will not allow firms operating in those provinces to rely on this transition period. MFDA members must pay commissions directly to all salespersons registered in these jurisdictions.

Also, the MFDA has suspended the rule requiring firms to be responsible for and to guarantee the obligations to clients incurred by each of its related members. It has been suspended until a protection plan provides coverage clients of MFDA Members.