By James Langton

(March 28 – 08:50 ET) – The Nova Scotia Securities Commission has proposed a local rule that will allow securities reps to incorporate.

Essentially the rule will allow corporations to perform registerable activities, such as selling securities. In other jurisdictions, reps have flowed their revenues from registerable activities through unregistered corporations.

“With the approval of the employer dealer of a salesperson, the rule will allow the registration of a registrant’s company to perform the activities which otherwise could only be performed by the registrant,” says the NSSC.

The NSSC’s director of registration will only grant a registration to such a company where the employer dealer is a member of a recognized SRO. As well, the by-laws, rules and regulations of the SRO must contemplate a registration in the category of affiliated company or a category which, in the opinion of the Director, is similar and the SRO’s oversight responsibilities extend to overseeing the employer dealer’s supervision of the affiliated company.

An affiliated company may perform any act which its principal registrant is entitled to perform under the Act by virtue of the principal registrant’s registration, provided that the act is undertaken by the principal registrant on behalf of the affiliated company. The acts of the company shall be considered to also be the acts of the individual for the purpose of civil liability and securities regulation. Also an employer dealer shall be responsible for the supervision of, and have liability for the acts and omissions of the registrant.

So far, the use of personal corporations in the fund dealer world will be preserved for three years from the beginning of the Mutual Fund Dealers Association. Other regulators, including the provincial commissions and the Investment Dealers Association, are considering the issue.