Local
Instrument 32-501 Deposit Agents suspended until April 1,
2006
On December 5,
2006 the Director issued
General Ruling Order 32-801 Suspension of Local Instrument
32-501 Deposit Agents (“GRO 32-801”). GRO 32-801
comes into force on January 1, 2006. It suspends the
implementation of
Local Instrument 32-501 Deposit Agents from
January 1 to April 1, 2006.
LI 32-501
requires intermediaries who trade in guaranteed investment
certificates to be registered and to comply with registration
ongoing requirements and business practices.
The delay in the
implementation of LI 32-501 is in response to feedback from
current deposit agents that they need more time to comply with the
new requirements under LI 32-501. We encourage deposit agents to
continue taking steps to get registered. We need to receive your
registration materials by March 15, 2006 at the very latest.
In the meantime,
here are some things for deposit agents to note:
- If your financial year end is December 31,
2005 or later, you do not have to file your annual filings under
the current Deposit Agent Rules in 2006. However, you should
otherwise comply with the business practices set out in the
Rules until April 1, 2006.
- You should review your agreements with
financial institutions to ensure that you will be complying with
LI 32-501 when it comes into force. LI 32-501 is based on the
current Deposit Agent Rules, and in most cases no changes to
these agreements will be required. But you should review them
just to be sure.
- Section 8 of LI 32-501 prohibits deposit
agents from entering into an agreement with an official or
salesperson in which the parties agree to limit the liability of
the deposit agent for the actions of the salesperson or
official. Therefore, you should review your current agreements
to ensure that they will comply with section 8 on April 1, 2006.
- Some deposit agents may have to reorganize
their business to comply with LI 32-501. Please call us to
discuss your plans to ensure that a reorganization is necessary,
and if so, whether it will comply with LI 32-501.
- Section 11 of LI 32-501 requires you to
have a standard form financial institution bond. We will soon
be providing more information about how to obtain such a bond.
