Canadian Investment Regulatory Organization Pursues Incorporated Approved Persons Approach

The Canadian Investment Regulatory Organization (CIRO) is moving forward with its proposed "incorporated approved persons approach" to allow all advisors to be compensated for both non-registrable and registrable activities through personal corporations. This approach will require changes to provincial securities legislation to harmonize the rules for mutual fund- and securities-licensed advisors. CIRO president and CEO Andrew Kriegler stated that the organization is pursuing the "incorporated approved persons approach" to find a solution that allows all activities to be carried out in the entity, not just non-registrable ones. The implementation of this approach will involve modifying rule amendments, seeking industry feedback, and engaging with provincial governments and tax authorities.

Key Takeaways:

• CIRO's proposed "incorporated approved persons approach" aims to allow all advisors to be compensated for both non-registrable and registrable activities through personal corporations.
• The current investment dealer consolidated rules prohibit personal corporations for mutual fund-licensed advisors, but provinces allow insurance sales through personal corporations.
• CIRO president and CEO Andrew Kriegler stated that the organization is pursuing the "incorporated approved persons approach" to harmonize the rules for mutual fund- and securities-licensed advisors.
• Implementation of the approach will require modifications to provincial securities legislation to allow representatives to be professional corporations.
• CIRO is working with the Canadian Securities Administrators and engaging tax authorities across the country to address regulatory and tax compliance matters.
• Richardson Wealth Ltd. and Sun Life Canada Securities Inc. have expressed support for the incorporated approved persons approach.
• It is unclear how the model will apply to employer-employee relationships, according to Dave Kelly, president and CEO of Richardson Wealth Ltd.

Statistics:

• CIRO has 2,000 mutual fund-licensed advisors with a "significant number" waiting for a unified advisor incorporation solution before getting securities licenses.
• Sun Life has approximately 2,000 mutual fund-licensed advisors who have opted to get securities licenses.
• Richardson Wealth has approximately 500-600 advisors who could be affected by the incorporated approved persons approach.
• CIRO's policy paper proposed a two-phase approach, with the first phase being rule modifications to create a new non-individual approved person category.

Sources:

• "Canadian Investment Regulatory Organization" (no date)
• "Advocis Symposium" (no date)
• "Globe and Mail" (no date)
• [names and titles of individuals mentioned in the text exactly as they appear]
• No specific dates mentioned in the original text.