Conducting securities trading or advising activities in Canada – International Adviser Exemption
Canadian securities regulators require that entities or individuals that conduct certain specified activities must first be registered with the securities regulatory authorities in the Canadian provinces or territories in which such activities are conducted. Firms and individuals must register if they are in the business of trading or advising in securities, acting as an underwriter, or acting as an investment fund manager. There are, however, numerous exemptions available to the registration requirement. For foreign adviser or dealers, the most commonly used exemptions are (1) international adviser; (2) international sub-adviser; and (3) international dealer. This article is part of a multi-part series, and discusses the international adviser exemption.
The international adviser exemption allows advisers with their head office or principal place of business in a foreign jurisdiction to advise certain “permitted clients”1 in Canada on “foreign securities” without having to register with the Canadian securities regulators. The adviser may also advise on securities of Canadian issuers, but only to the extent that the advice is incidental to its acting as adviser to foreign securities. The adviser is subject to certain other conditions including that the adviser: must be registered to perform such functions in the foreign jurisdiction or be operating under an exemption from registration; engages in the business of an adviser in the foreign jurisdiction; only a prescribed amount of their gross revenue is derived from portfolio management activities in Canada; provides certain client disclosures; appoints an agent for service; and notifies the Canadian securities regulator. While it has its limitations, the international adviser exemption may be an option for certain foreign advisers. Please consult with Canadian legal counsel to learn the details about this exemption and whether you qualify.
This article is an overview only and does not constitute legal advice. It is not intended to be a complete statement of the law or the proposed regulations. You should not act upon the information in this article without a thorough examination of the law or proposed regulations as applied to the facts of your situation.
*(1) “Permitted client” is defined in National Instrument 31-103: Registration Requirements, Exemptions and Ongoing Registration Requirements and includes certain institutional and high-net worth investors.