Jason Brooks

Earlier this year, we reflected on the growth of the digital asset industry and the guidance provided by Canadian securities regulators in 2021. As we pass the halfway point of 2022, we want to continue the dialogue about some recent developments in the digital asset space and how these developments may impact companies operating in Canada.

On October 3, 2019, the Canadian Securities Administrators (CSA) released final rule amendments that are intended to better align the interests of registrants, including individual registrants, with the interests of their clients. The CSA emphasize that their aim is to create a “new, higher standard of conduct” across all categories of registrants, which will result in registrants putting the interests of their clients first, particularly (but not solely) when managing conflicts of interest and… Show more

On October 3, 2019, the Canadian Securities Administrators (CSA) released final rule amendments that are intended to better align the interests of registrants, including individual registrants, with the interests of their clients. The CSA emphasize that their aim is to create a “new, higher standard of conduct” across all categories of registrants, which will result in registrants putting the interests of their clients first, particularly (but not solely) when managing conflicts of interest and making suitability determinations. Thus, the CSA describe the rule amendments as the “client focused reforms”. Show less

On July 31, 2019, the UK Financial Conduct Authority (FCA), the U.K.’s financial services conduct regulator, released its policy statement containing final guidance on the regulations applicable to cryptoassets (the Policy Statement) under the U.K. Financial Services and Markets Act 2000. The Policy Statement sets out how the FCA determines whether a particular cryptoasset is a “security”, the scope of regulated financial services activities, and the permissions and obligations associated with… Show more

On July 31, 2019, the UK Financial Conduct Authority (FCA), the U.K.’s financial services conduct regulator, released its policy statement containing final guidance on the regulations applicable to cryptoassets (the Policy Statement) under the U.K. Financial Services and Markets Act 2000. The Policy Statement sets out how the FCA determines whether a particular cryptoasset is a “security”, the scope of regulated financial services activities, and the permissions and obligations associated with carrying out regulated activities in relation to cryptoassets that are considered to be securities. The Policy Statement is relevant to anyone engaged in the issuance, creation, marketing, sale, holding or storing of cryptoassets in the U.K., and to others interested in the comparative approach to the regulation of cryptoassets taken by regulators outside Canada and the U.S. Show less

Toronto (January 10, 2019) — RBC Global Asset Management Inc. (RBC GAM Inc.) announced its strategic alliance with BlackRock Asset Management Canada Limited (BlackRock Canada), to offer the largest and most comprehensive ETF suite in Canada.

Borden Ladner Gervais LLP (BLG) represented RBC GAM Inc. in the formation of this alliance, which brings together the ETF families offered in Canada by RBC GAM Inc. and BlackRock Canada under one new brand — RBC iShares. This new $60 billion solution… Show more

Toronto (January 10, 2019) — RBC Global Asset Management Inc. (RBC GAM Inc.) announced its strategic alliance with BlackRock Asset Management Canada Limited (BlackRock Canada), to offer the largest and most comprehensive ETF suite in Canada.

Borden Ladner Gervais LLP (BLG) represented RBC GAM Inc. in the formation of this alliance, which brings together the ETF families offered in Canada by RBC GAM Inc. and BlackRock Canada under one new brand — RBC iShares. This new $60 billion solution suite includes a total of 150 ETFs that will be available through full-service advisors, discount brokerages and robo-advice platforms.

A multidisciplinary team of BLG lawyers supported RBC GAM Inc.’s in-house team in the creation of this alliance, bringing together expertise in M&A, investment management, competition, tax, intellectual property, privacy and labour and employment law. RBC’s in-house team was led by Nicole Lee, Assistant General Counsel, and Anthony Pagano, Chief Counsel, M&A, and included Natasha Moore, Senior Counsel, and Matt Bassani, Senior Counsel. BLG’s team was led by Cameron MacDonald and Jason Brooks, and included Lynn McGrade and Susan Kwan (investment management), Subrata Bhattacharjee and Denes Rothschild (competition), Craig Webster, Beverly Gilbert and Danny Lang (tax), Rob Weir and James Fu (labour and employment), Kathleen Lemieux (intellectual property), Bradley Freedman (privacy) and Kate Menear (litigation).

BLG’s involvement in this major transaction builds on our reputation as a leading law firm, receiving the highest rating in the 2019 edition of Chambers Canada – Canada’s Leading Lawyers for Business in both investment funds and employment and labour.
Show less

Cryptocurrency and blockchain technology are burgeoning and disruptive areas. Almost daily, a new type of cryptocurrency or cryptocurrency-related product is announced or a new application for blockchain technology is found. Regulators are working hard to respond to these developments with rules, decisions, guidance and advisories.
This bulletin provides snapshots of some of the more interesting or significant developments in this space over the past few months.

Initial Coin Offerings (ICOs) are back in the hot seat with one of the latest settlement decisions of the United States Securities and Exchange Commission (SEC).
In the settlement decision, the SEC found Tomahawk Exploration LLC’s founder David Laurance in breach of U.S. securities laws as a result of his actions surrounding his proposed ICO of Tomahawkcoins (TOM). The SEC fined Laurance US$30,000 and barred him for life from acting as an officer or director of any issuer or participating in… Show more

Initial Coin Offerings (ICOs) are back in the hot seat with one of the latest settlement decisions of the United States Securities and Exchange Commission (SEC).
In the settlement decision, the SEC found Tomahawk Exploration LLC’s founder David Laurance in breach of U.S. securities laws as a result of his actions surrounding his proposed ICO of Tomahawkcoins (TOM). The SEC fined Laurance US$30,000 and barred him for life from acting as an officer or director of any issuer or participating in any offering. While this is not the first coin or token to face criticism from the SEC, the findings in this particular decision are interesting because they apply to coins that were freely distributed by the company through a “bounty program” rather than purchased by investors through an ICO.
Show less

The Canadian Securities Administrators’ (CSA) long-standing initiatives to deal with the investor protection issues they consider associated with today’s retail client-registrant relationships and current methods of mutual fund compensation finally coalesced with the June 21 release of two significant publications:
• CSA Notice and Request for Comment Reforms to Enhance the Client-Registrant Relationship (Client Focused Reforms) Proposed Amendments to National Instrument 31-103 Registration… Show more

The Canadian Securities Administrators’ (CSA) long-standing initiatives to deal with the investor protection issues they consider associated with today’s retail client-registrant relationships and current methods of mutual fund compensation finally coalesced with the June 21 release of two significant publications:
• CSA Notice and Request for Comment Reforms to Enhance the Client-Registrant Relationship (Client Focused Reforms) Proposed Amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations and Companion Policy 31-103 CP (NI 31-103 Reforms) and
• CSA Staff Notice 81-330 Status Report on Consultation on Embedded Commissions and Next Steps (Mutual Fund Fee Reforms).

Both of these projects are entering their sixth year of intensive regulatory analysis and review. Both arise out of principled concerns expressed by the CSA that the status quo is not serving retail investors appropriately, which requires changes to be made. The Mutual Fund Fee Reforms are not being published for comment at this time. The CSA will publish draft rules for comment, which are expected to be released in September 2018. Comments are due on the NI 31-103 Reforms by October 19, 2018.
Show less

​On September 5, 2017, securities regulators in British Columbia and Ontario granted First Block Capital Inc. registration as an investment fund manager and an exempt market dealer in order to operate a bitcoin investment fund. This is the first registration of an investment fund manager in Canada solely dedicated to cryptocurrency investments.

BLG represented First Block Capital with a team lead by Jason Brooks that included Rob Wallis and Lyne St. Pierre in relation to the registration… Show more

​On September 5, 2017, securities regulators in British Columbia and Ontario granted First Block Capital Inc. registration as an investment fund manager and an exempt market dealer in order to operate a bitcoin investment fund. This is the first registration of an investment fund manager in Canada solely dedicated to cryptocurrency investments.

BLG represented First Block Capital with a team lead by Jason Brooks that included Rob Wallis and Lyne St. Pierre in relation to the registration application, and Carol Derk, Craig Webster (Tax), Grace Pereira (Tax), Whitney Bell and Inaki Gomez in relation to First Block's bitcoin investment fund.
Show less

The start of every new year brings with it the excitement of new beginnings and the prospect of new challenges. 2017 is no exception – at least on the Canadian securities regulatory front, with hotly anticipated significant new developments and regulatory deadlines.

The first new regulatory deadline is fast approaching – Monday, January 30, 2017 is the final day that a Report of Exempt Distribution (Form 45-106F1) can be filed (without penalty) by investment funds who have distributed… Show more

The start of every new year brings with it the excitement of new beginnings and the prospect of new challenges. 2017 is no exception – at least on the Canadian securities regulatory front, with hotly anticipated significant new developments and regulatory deadlines.

The first new regulatory deadline is fast approaching – Monday, January 30, 2017 is the final day that a Report of Exempt Distribution (Form 45-106F1) can be filed (without penalty) by investment funds who have distributed securities to investors using specified prospectus exemptions set out in National Instrument 45-106 Prospectus Exemptions and section 73.3 of the Securities Act (Ontario).

Investment funds, like other issuers, have the option of filing Reports of Exempt Distribution within 10 days after a distribution, but many investment funds choose to file the Reports on an annual basis as has been permitted for many years under NI 45-106 in respect of exempt distributions in reliance on the above-noted prospected exemptions. 2017 is the first year that investment funds must file the Reports within 30-days of the calendar year end (previously the Reports were to be filed within 30 days of the funds' financial year end).

2017 is also the first year that these Reports must be filed on SEDAR in respect of distributions to residents of all provinces, other than Ontario and British Columbia.

For more, see the full article. Show less

On November 29, 2016, at a Canada Revenue Agency (“CRA”) round table hosted by the Canadian Tax Foundation, CRA representatives spoke to the application of the advantage rules to payments of management fees by the annuitant of an RRSP or RRIF or the holder of a TFSA (RRSP’s, RRIF’s, and TFSA’s are “registered plans”). At the round table, the CRA took the position that management fees paid by the registered plan annuitant or holder, referred to as the “controlling individual” under subsection… Show more

On November 29, 2016, at a Canada Revenue Agency (“CRA”) round table hosted by the Canadian Tax Foundation, CRA representatives spoke to the application of the advantage rules to payments of management fees by the annuitant of an RRSP or RRIF or the holder of a TFSA (RRSP’s, RRIF’s, and TFSA’s are “registered plans”). At the round table, the CRA took the position that management fees paid by the registered plan annuitant or holder, referred to as the “controlling individual” under subsection 207.01(1) of the Income Tax Act (Canada) (“ITA”), constitute an advantage under Part XI.01 of the ITA. In particular, the CRA now considers the increase in value of property held in a registered plan that indirectly results from investment management fees being paid outside of the plan to likely constitute an “advantage”.

For more, see the full article. Show less

The Canadian Securities Administrators (the CSA) continue to refine the disclosure regime applicable to investment funds, with final rules released on December 8, 2016 requiring ETF facts documents to be prepared and delivered post-trade. The final rules codify the requirement for exchange-traded funds (ETFs) to prepare, and for dealers to deliver, a summary document in the form of “ETF Facts” prescribed by the new Form 41-101F4 Information Required in an ETF Facts Document, and provide for a… Show more

The Canadian Securities Administrators (the CSA) continue to refine the disclosure regime applicable to investment funds, with final rules released on December 8, 2016 requiring ETF facts documents to be prepared and delivered post-trade. The final rules codify the requirement for exchange-traded funds (ETFs) to prepare, and for dealers to deliver, a summary document in the form of “ETF Facts” prescribed by the new Form 41-101F4 Information Required in an ETF Facts Document, and provide for a statutory right of action for failure to deliver the ETF Facts. The final rules look much like those that were proposed in June 2015; however, there are a few differences. The final rule amendments to National Instrument 41-101 General Prospectus Requirements, Companion Policy 41-101CP and Form 41-101F4, come into force on March 8, 2017, with a two-year phased-in implementation period for both ETF managers and dealers.

For more, see the full article. Show less

The Canadian Securities Administrators (CSA) has ushered in a bold new era for Canadian investors in its final push to modernize the regulation of investment funds. On September 22, 2016, the CSA published proposed amendments to National Instrument 81-102 Investment Funds (NI 81-102), Companion Policy 81-102CP and related national instruments available here which, when adopted in final form, will permit alternative mutual funds to be offered to retail investors in Canada in much the… Show more

The Canadian Securities Administrators (CSA) has ushered in a bold new era for Canadian investors in its final push to modernize the regulation of investment funds. On September 22, 2016, the CSA published proposed amendments to National Instrument 81-102 Investment Funds (NI 81-102), Companion Policy 81-102CP and related national instruments available here which, when adopted in final form, will permit alternative mutual funds to be offered to retail investors in Canada in much the same manner as conventional mutual funds are currently offered. With these rule amendments, the CSA are finalizing their investment fund modernization rule review project that was launched in 2010 and described in some detail in 2011.

The ultimate effect of the proposed amendments will be to bring conventional mutual funds, “alternative funds” and closed-end funds (non-redeemable investment funds) under the same regulatory umbrella, with much the same regulation, but with important and significant differences, especially as it applies to investment restrictions for each of these categories of funds.

The proposed amendments will provide managers with a promising opportunity to bring alternative fund strategies to retail investors and include some positive changes for conventional mutual funds, including exchange traded funds (ETFs), but may also present new challenges to some closed end funds (non-redeemable investment funds), given the proposal to add new investment restrictions to these funds.

The comment period on the proposed amendments ends on December 22, 2016.

For more, see the full article.
Show less

Under current regulation, managers of publicly offered investment funds who wish to call an annual or special meeting of securityholders, must deliver meeting materials to beneficial owners of securities using the process set out in National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer (NI 54-101) and National Instrument 81-106 Investment Fund Continuous Disclosure. The printing and postage costs associated with the production and mailing of… Show more

Under current regulation, managers of publicly offered investment funds who wish to call an annual or special meeting of securityholders, must deliver meeting materials to beneficial owners of securities using the process set out in National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer (NI 54-101) and National Instrument 81-106 Investment Fund Continuous Disclosure. The printing and postage costs associated with the production and mailing of information circulars to securityholders can be costly for funds and their managers.

BLG is pleased to announce that we recently obtained, on behalf of certain investment fund managers, a novel exemption which allows the managers to use the “notice and access” process that is currently only available to reporting issuers that are not investment funds under NI 54-101. Using this process, the manager must send a notice and access document and a form of proxy (or voting instruction form) to the securityholders of the fund, and must post the information circular on its website, but is not required to mail the information circular unless a securityholder asks for one.

We are confident that this exemption will substantially reduce the costs associated with holding securityholder meetings, and would like to offer our assistance, on a fixed-fee basis, to other fund managers who would like to obtain a similar exemption.

We would be pleased to discuss with you
• Your participation in a group application for Notice-and-Access relief to be granted to you and other participating fund managers or
• If you have unique circumstances, a tailored individual exemption application to your principal regulator.

For more, see the full article. Show less

On July 7, 2016, the Canadian Securities Administrators (CSA) published proposed amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations and National Instrument 33-109 Registration Information and also to their respective Companion Policies. The proposed amendments have been published for comment with a comment deadline of October 5, 2016.

While there is much regulatory finessing of existing requirements and guidance amounting… Show more

On July 7, 2016, the Canadian Securities Administrators (CSA) published proposed amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations and National Instrument 33-109 Registration Information and also to their respective Companion Policies. The proposed amendments have been published for comment with a comment deadline of October 5, 2016.

While there is much regulatory finessing of existing requirements and guidance amounting to clarifications that are non-problematic and helpful, there are more substantive proposals that will, if adopted, affect registrants' custody arrangements made for clients, including any pooled funds they manage, as well as registrants' compliance with the existing "client relationship model" (CRM2) requirements. Additional proposals are intended to provide certainty on the activities that can be carried out by exempt market dealers (EMDs). Finally, the CSA ask questions about expanding the CRM2 requirements that would, if adopted, amount to a third phase of this regulatory initiative.

The amendments to NI 31-103 will affect registered advisers (portfolio managers), investment fund managers, scholarship plan dealers and EMDs, as applicable, but not registered dealers which are members of either of the two self-regulatory organizations (SROs) in Canada, which are expressly exempted from many of the proposals in NI 31-103, given existing SRO regulation.

For more, see the full article.
Show less

Dealers who place clients in related investments should ensure that their holiday reading list includes the recently released CSA Staff Notice 31-343 Conflicts of Interest in Distributing Securities of Related or Connected Issuers. The Notice sets out concerns of the staff of the Canadian Securities Administrators (CSA) regarding the conflicts of interest they consider are inherent when registrants trade in or advise on securities of related and connected issuers. CSA staff have zeroed in on… Show more

Dealers who place clients in related investments should ensure that their holiday reading list includes the recently released CSA Staff Notice 31-343 Conflicts of Interest in Distributing Securities of Related or Connected Issuers. The Notice sets out concerns of the staff of the Canadian Securities Administrators (CSA) regarding the conflicts of interest they consider are inherent when registrants trade in or advise on securities of related and connected issuers. CSA staff have zeroed in on firms that are registered solely as exempt market dealers and distribute securities of related or connected issuers, where the mind and management of the dealer and the issuers (and/or their managers) are one and the same. CSA staff refer to these dealers as captive dealers. The Notice identifies the compliance issues that CSA staff have found raised by captive dealers who have been the subject of compliance reviews and initial registration applications, and provides staff guidance on acceptable (and unacceptable) practices to address the conflicts and compliance issues. Show less