The Mutual Fund Dealers Association on Wednesday issued a bulletin to clarify that dealers can now pay commissions to reps’ personal corporations in B.C.

It notes that a local B.C. rule provides that a corporation is exempt from the registration requirement, in connection with receiving commissions from a dealer, provided the corporation and the dealer have a written contract under which the dealer is liable for the acts and omissions of the corporation.

The MFDA’s original rules stipulated that commissions must be paid to reps directly, however a three-year transition period was adopted to minimize industry disruption.

As part of their terms and conditions for recognizing the MFDA as a self-regulatory organization, the Ontario and Saskatchewan Securities Commissions agreed to allow a three-year transition period. Accordingly, dealers in these jurisdictions are permitted to pay commissions to a corporation that is not registered, notwithstanding the original rule.