The Nova Scotia Securities Commission is seeking comment on a proposed rule that would allow salespeople to register with the commission as independent contractors.

Under the proposed rule, an individual, who is not otherwise an employee of a dealer, shall be deemed to be an employee of the dealer for the purpose of the Securities Act and the regulations, and qualified for registration as a salesman of the dealer. The proposed rule is intended to permit further flexibility by permitting the registration of a person as a salesperson of the dealer even though that person is not in an employer/employee relationship with the dealer.

“The commission is of the view that distribution structures should be assessed in the context of achieving the objectives of the statutorily mandated regime and not held captive by the formality of the structure. That proposed rule will permit flexibility in distribution structures by allowing a salesperson to deliver his or her
services through a company registered as an affiliated company.”

A dealer will be vicariously liable with an employee who is registered as its salesman. A dealer will also have the same supervisory obligations as it has with an employee. The rule requires that the contractual relationship between the dealer and the rep identify the rep as its agent in respect of property of customers of the dealer which may be in the possession of the deemed employee.

“This is intended to ensure that the property will be dealt with under the Bankruptcy and Insolvency Act in the same manner as would apply if the property was in the actual possession of the employer dealer.”

Comments are due by January 31, 2002.