The long-awaited "Stage 2" package of reforms that apply to mutual fund "point of sale" disclosure has now been finalized by the Canadian Securities Administrators (CSA) and the rule amendments are expected to come into effect on September 1, 2013. Amendments to National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) and its companion policy (as well as consequential amendments made to National Instrument 81-102 Mutual Funds) were finalized and published on June 13, 2013 [available here].

This package of reforms will require all mutual funds to file amended Fund Facts that comply with new disclosure requirements by May 13, 2014. Dealers will be required to deliver the applicable Fund Facts to investors in mutual funds within 2 days of the trade (which is the same timing as currently required for delivery of prospectuses) on and after June 13, 2014. Simplified prospectuses will no longer be required to be delivered to investors after June 13, 2014.

Although significant new disclosure requirements are still mandated for Fund Facts, the CSA pulled back on some of the more controversial disclosure proposals in response to industry feedback and as a result of their own testing of the revised Fund Facts documents. The final rules – and the transition periods – reflect an understanding by the CSA of the reasons prompting the feedback and will result in improvements to Fund Facts disclosure for investors.

We received feedback from OSC staff on a few implementation issues, including the status of "PAC" prospectus delivery relief, the ability to file Fund Facts using the new form after the effective date of the amendments (September 1, 2013), but before January 13, 2014 (to allow for one filing, rather than two filings in 2014) and confirmation that the "sunset" clause for the existing relief allowing for delivery of Fund Facts rather than the simplified prospectus means that the relief expires on June 13, 2014 and not before.

Please click here to review our Investment Management Bulletin Canadian Securities Regulators Finalize New Format for Fund Facts and Mandate Delivery Effective June 13, 2014.

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