The Securities Commission has granted an exemption to an investment fund manager from a specific provision of National Instrument 81-105 Mutual Fund Sales Practices. The exemption allows the manager to cover direct costs for participating dealers related to educational sales communications, conferences, or seminars on financial planning matters.
Key points of the decision include:
– The exemption is from subsection 5.1(a) of NI 81-105, which generally prohibits fund managers from paying for marketing initiatives not primarily about mutual funds.
– The fund manager, registered in various Canadian jurisdictions, manages mutual funds and exchange-traded funds subject to NI 81-105.
– The exemption enables the manager to sponsor events primarily aimed at educating investors on financial planning, including investment, retirement, tax, and estate planning.
– The manager must still comply with other requirements of NI 81-105, such as not conditioning sponsorship on the sale of funds or providing incentives for recommending their funds.
– Educational materials must be general, approved by the manager, and presented by qualified speakers, with a disclaimer that they are not providing specific advice.
The outcome is that the fund manager can support educational initiatives that may benefit investors by enhancing their financial planning knowledge, provided that certain conditions are met to ensure the educational purpose and avoid conflicts of interest. The decision is grounded in the securities legislation of Ontario and relies on Multilateral Instrument 11-102 Passport System for application across Canada.