CSA adopt Fund Facts pre-sale requirements for mutual funds

December 11, 2014

The Canadian Securities Administrators today announced amendments to mutual fund prospectus disclosure rules to implement the pre-sale delivery of Fund Facts. The amendments to National Instrument 81-101 Mutual Fund Prospectus Disclosure represent the third stage of the CSA's point of sale disclosure project for mutual funds.

Under the amendments, the most recently filed Fund Facts will have to be delivered to a purchaser before a dealer accepts an instruction for purchase. This delivery requirement will apply to all purchases, including both full service accounts and order execution-only accounts. There will be an exception, subject to certain conditions, where the purchaser instructs the dealer that the purchase must be completed immediately or by a specified time and it is not reasonably practicable to complete pre-sale delivery. In such a case, the Fund Facts will have to be delivered within two days of purchase. This exception will only be available on a purchase by purchase basis and dealers will not be permitted to rely on a blanket consent from the purchaser for post-sale delivery.

Pre-sale delivery requirements will also not apply to subsequent purchases of securities of a mutual fund pursuant to pre-authorized purchase plans where the purchase is not the first purchase under the plan and the dealer provides notice to the purchaser that includes information on how to access and request the Fund Facts. However, the purchaser will not have a right of withdrawal for subsequent purchases.

An initial proposal on pre-sale delivery was made in 2009 as part of the CSA's proposal of amendments related to point of sale disclosure. Amendments were republished earlier this year, and the final form of amendments take into account stakeholder comments.

According to the CSA, pre-sale deliver of Fund Facts will assist investors by making information available to them "at a time that is most relevant to their investment decision."

Subject to Ministerial approval, the amendments come into force March 11, 2015, with the pre-sale delivery requirement coming into effect on May 30, 2016.

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