Ontario Securities Commission

Amendments to National Instrument 81-105 Mutual Fund Sales Practices, Companion Policy 81-105CP to National Instrument 81-105 Mutual Fund Sales Practices and Related Consequential Amendments

On June 1, 2022, amendments to the following rules will come into force:

  • National Instrument 81-105 Mutual Fund Sales Practices
  • National Instrument 81-101 Mutual Fund Prospectus Disclosure
  • National Instrument 41-101 General Prospectus Requirements

except for:

  1. the definition of “suitability determination” which has an effective date of December 31, 2020;
  2. the exemption for the delivery of fund facts documents for no-trailing-commission switches, which has an effective date of December 31, 2020; and
  3. the exemption for the delivery of ETF facts documents for no-trailing-commission ETF switches, which has an effective date of December 31, 2020.

National Instrument 81-105 Mutual Fund Sales Practices regulates the sales and business practices followed both by managers and principal distributors of publicly offered mutual funds, and by registered dealers and their sales representatives in connection with the distribution of securities of publicly offered mutual funds. National Instrument 81-101 Mutual Fund Prospectus Disclosure sets out the prospectus disclosure obligations for mutual funds. National Instrument 41-101 General Prospectus Requirements sets out general prospectus requirements, including prospectus disclosure requirements for exchange-traded mutual funds.

The amendments prohibit the payment of trailing commissions by members of the organization of publicly-offered mutual funds (fund organizations) to participating dealers who were not required to make a suitability determination in connection with a client’s purchase and ongoing ownership of prospectus qualified mutual fund securities. The amendments also prohibit the solicitation or acceptance of trailing commissions by participating dealers from fund organizations, in connection with securities of the mutual fund held in an account of a client of the participating dealer if the participating dealer was not required to make a suitability determination in respect of the client in connection with those securities.

The full text of the amendments is available in the Ontario Securities Commission’s Bulletin at 2020 43 OSCB 9275 and on the Commission’s website at www.osc.gov.on.ca.

(154-G002)