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Investment regulation - Canada

Regulatory structure

Please refer to the CBL Market infrastructure - Canada for the complete information about the regulatory structure.

Holding restrictions

Register market

Disclaimer

The information contained in the Holding Restrictions is based on the legal opinion obtained by CBL that was issued on 22 May 2019. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Holding Restrictions do not constitute legal advice and clients should seek advice from independent professional counsel.

Clients are responsible for ensuring compliance with the disclosure requirements and agree to indemnify and hold harmless CFCL, for any loss, expense, liability, damage or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.

Restrictions on clients

Canadian clients and beneficial owners are not allowed to hold Canadian funds through CFCL. It is the responsibility of the client/beneficial owners to ensure compliance with the restriction.
Certain funds may impose specific restrictions on investor domicile. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering into transactions.

Restrictions on settlement

There is no general restriction on settlement for the Canadian investment funds through CFCL. However, certain funds may impose specific settlement/transfer restrictions. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering transactions.

CSD market

Please refer to the Investment regulation - Canada for the complete information about the Holding Restrictions in Canada.

Disclosure requirements

Introductory information and categories

This section provides general information about the disclosure requirements for fund securities holdings with which Clearstream Fund Centre must, according to the information available at the time of the present publication, comply with each of the domestic markets and fund markets covered by the Disclosure Requirements.

Fund securities that are held remotely are usually not disclosed by CFCL. A disclosure request received by CFCL regarding such a holding will be forwarded to the relevant client without assessing its validity and the CFCL Client shall handle the request on a voluntary basis.

Disclosure requirements are only available for those countries where CFCL has a link to the respective domestic market or direct access to local domiciled funds that are held in Clearstream’s name on the register.

For fund securities holdings where CFCL has no such link or direct access to the register, clients must be aware that local laws might provide for mandatory disclosure. A disclosure request in this regard will be forwarded to clients without assessing its validity. Clients commit not to unreasonably withhold their consent to such a request and agree to indemnify CFCL for damages resulting directly from non-compliance with mandatory local disclosure requirements.

In most cases, the obligation to disclose is based on the domestic equivalent of a Companies Act, relevant investment funds act or anti-money laundering act and covers all security types.

In some instances, the obligation to disclose is based on stock exchange laws or regulations and only applies to listed domestic and foreign securities.

The Disclosure Requirements do not constitute legal advice and the Clients should seek independent professional advice in relation to fund securities deposited with CFCL, especially as, for those jurisdictions in which no disclosure obligation falls on CFCL, there may be separate disclosure requirements that apply directly to clients of CFCL, shareholders and beneficial owners.

Please note that CFCL is not always given comprehensive information or advised of changes affecting local disclosure requirements.

It remains the sole responsibility of the Client to ensure compliance with local disclosure requirements. If a requirement is not met, it is the Client who will be liable to any related penalty. Clients are therefore advised to seek independent legal advice on the existence and interpretation of local disclosure requirements.

In the case of a discrepancy between the general information contained in this document and the information provided by CFCL for a specific market, as applicable (irrespective of whether this information has been obtained from an agent of Clearstream Fund Centre, or, as the case may be, a foreign regulator of a branch of CFCL), the information provided by CFCL for the specific market as applicable, shall prevail.

N.B.: In all countries, if it is suspected that a disclosure obligation has been breached (for example, that a threshold of holdings under custody has been crossed without being reported), the regulators and the authorities may have the power to investigate. Moreover, in all countries, disclosure obligations might be triggered by enforceable judgements of the competent jurisdiction of the country in question.

Disclosure categories

Clearstream Fund Centre classifies disclosure scenarios according to the following market categories:

Category 1

Markets where disclosure by Clearstream Banking to issuers, investment fund managers and/or to regulators or market authorities is mandatory under applicable law;

Category 2

Markets where disclosure by Clearstream Banking of account holders to issuers, investment fund managers and/or foreign regulators or market authorities is a legal obligation in respect of securities in specific circumstances;

Category 3

Markets where there is no obligation for Clearstream Banking as custodian of Clearstream Fund Centre to disclose account holders to issuers, investment fund managers and/or regulators, notwithstanding any disclosure requirement falling directly on clients of Clearstream Banking, shareholders and/or beneficial owners or notwithstanding disclosure necessary to obey an enforceable judgement of the country in question.

Disclosure requirements – Register Market - Canada

Disclosure Category: 2

Clearstream Fund Centre S.A. (“CFCL”) may be required upon request, to disclose the identity and holdings of clients and ultimate beneficial owners in case of holding Canadian investment funds.

Consent

In order to comply with the applicable legislation, Clients with holdings in Canadian investment funds or entering into transactions in the Canadian market must consent, and are hereby deemed to consent, to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the Fund Manager, Transfer Agent, Regulator) as their attorney-in-fact, under power of attorney, to collect from CFCL the required information to be disclosed. Clients who do not grant such authority cannot hold such investment funds / financial instruments in their accounts with CFCL.

Disclosure Requirement

The Fund and the Registrar are not entitled by law to request disclosure in respect of CFCL clients or ultimate beneficial owners.

However, it is likely that the Registrar and the dealer which distributed Units on behalf of the Fund (“Dealer”) will contractually obtain such right to request disclosure in order to satisfy their AML and KYC requirements. At the same time, under Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, there is an obligation on the Dealer to collect beneficial ownership information.

Please refer to the Disclosure Requirements – Investment Funds – Canada for more information about the Disclosure Requirements in Canada.

Disclosure requirements – CSD Market - Canada

Disclosure Category: 2

Investment in a limited number of industries is monitored and foreign investors must declare their nationality and complete a declaration form when purchasing shares.

An obligation may fall on CBL, as a custodian, to disclose details of its account holders to issuers and/or to regulators on request in certain specific circumstances.

Consent

Clients holding Canadian shares consent and are hereby deemed to consent to disclosure and to the appointment of the requestor (that is, the issuer) as their attorney-in fact, under power of attorney to collect from CFCL such information as is required to be disclosed. Clients who do not want to grant such authority to CFCL should refrain from holding such shares in their account with CFCL.

Disclosure requirements

If the disclosed information about the holding reveals that a client’s holding in the shares of a Canadian issuer eligible in CFCL exceeds a certain percentage, such issuer may require CFCL to request that client to disclose information about the final beneficial owners of that holding.

In addition, the National Instrument 54-101 that addresses shareholder communication requires that the local custodian releases information about beneficial owners to issuers or third parties on request, unless they have expressly objected to such disclosure in the proxy related materials in connection with shareholder meetings.

The disclosure request and the information required on a declaration of beneficial ownership also varies from industry to industry and from company to company. Some companies may require the name, address and residence status of the beneficial owner(s) to be disclosed; others may only require information to know whether beneficial owners are residents or non-residents of Canada.

Please refer to the Disclosure Requirements – Canada for more information about the Disclosure Requirements in Canada.