Submissions to Government

PMAC Comment Letter to CSA on Access-Based Model for Investment Fund Reporting Issuers

Key Recommendations

  1. Give Issuers the option to continue to use the current process, or adopt a true access-based systemIssuers should have the option to continue to use the current process, namely mailing annual reminders of the availability of the documents or soliciting annual instructions, rather than adopting the new process proposed in the Consultation. As discussed below, many Issuers do not have systems in place to maintain standing instructions or provide electronic documents or notifications to Securityholders. Building such systems represents a significant burden and cost to Issuers.

    Moreover, many firms also use the annual mailing to Securityholders to satisfy the other notification requirements, as is discussed further below. Given that these annual notification requirements are not included in the Consultation, the proposed amendments will not significantly reduce burden for Issuers. The requirement to issue a news release also represents a significant new cost to Issuers, which, as is discussed below, we do not believe will be beneficial to Securityholders. These issues could be resolved if the CSA moved quickly to adopt a true access-based system, which would eliminate the need for Issuers to communicate individually with Securityholders.

  2. Securityholder requests for electronic delivery of documents should be optional and not mandatedCertain Issuers may be more readily able to offer electronic delivery of documents than others. Issuers should have the discretion to offer or not offer electronic delivery of documents. Further, for Issuers that are able to offer electronic delivery, we believe that the requirement should be revised such that Securityholders may be provided with notice and a link to the website where the documents may be accessed, rather than electronic delivery of the actual document. We believe that a link is: (a) consistent with the notification requirements for electronic delivery under National Policy 11-201 Electronic Delivery of Documents (NP 11-201) (although we note below the limitations with respect to the use of hyperlinks in NP 11-201) and, (b) more efficient, as Securityholders may seek multiple documents and the size of those documents may result in difficulties with electronic delivery. In addition, as Securityholders’ e-mail information can become stale-dated, the proposals should be amended to confirm that Issuers are not in default of delivery obligations should the e-mail information be stale-dated or the e-mail undeliverable.

    As noted above, not all Issuers have the ability to maintain standing instructions or to provide electronic notice and delivery of documents. We discuss further below some of the impediments to electronic delivery contained in NP 11-201. Securityholders should be educated and encouraged to access documents on the designated website or on SEDAR, and if SEDAR is intended to be a resource for Securityholders to obtain information, it should provide improved accessibility, including to allow Securityholders to subscribe to receive notifications about documents via e-mail.

  3. Remove the requirement to issue a news releaseThe requirement to issue a news release in addition to posting documents on the designated website and on SEDAR is redundant. This requirement will cause SEDAR and the designated website to be visually overwhelmed, which will be confusing to investors, and it will present a significant cost and burden to Issuers. We recommend that this requirement be removed. In the alternative, we believe that the requirement should be changed to only require a news release when the first designated document is posted, and that only a single news release be required for multiple funds from the same issuer.
  4. Continue to conduct behavioural research and investor education with a view to adopting a true access-based modelMost consumers use the Internet to access information about products, including investment products. The CSA should continue to conduct behavioural research and develop programs and information to educate investors about how to access information online. Over time, paper-based disclosure should be eliminated and additional documents should be included in an access-based system. Doing so will improve investor access to up-to-date and relevant information about investments in a manner that is easy to find, search, store and retrieve.

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