Question of the Week: What are the minimum statement requirements for an adviser?

Submitted by nsscadmin on Wed, 05/20/2020 - 10:15

Under securities laws, financial advisers must send their clients several statements during the year. But what are these requirements exactly? Today we’ll outline the minimum statement requirements for advisers and where they can be found in securities law.

The laws around financial statements are found under different sections in National Instrument 31-103.

First is section 14.14. This section outlines how often an adviser must send account statements to their clients. It states that an adviser must send their clients account statements on a quarterly basis (every three months) or if requested by the client, monthly. These statements outline any securities transactions processed on the client’s account during this time. This includes any purchase, sale or transfer of securities, dividends or interest payments received or reinvested, any fees or charges, any other account activity, and typically includes investments held in the account.

Section 14.17 outlines the requirements advisers and firms must meet regarding the annual report on charges and other compensation. The annual report on charges and other compensation must be delivered to all clients every 12 months. The report must disclose all the firm’s charges and other compensations the firm received in connection with the client’s investments.

Section 14.18 outlines the requirements advisers and firms must meet regarding investment performance reports. These reports must be delivered to a client annually and outline the performance of all investments during the previous year. This includes changes in market value.

For full details on all these statements and their requirements please review the above sections in National Instrument 31-103.

Failure to file annual financial statements.
Failure to file interim financial statements.
Failure to file an annual or interim management’s discussion and analysis (MD&A) or an annual or interim management report of fund performance (MRFP).
Failure to file an Annual Information Form (AIF).
Failure to file a certification of annual or interim filings required by Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (MI 52-109).
Failure to file required proxy materials or a required information circular.
Failure to file an issuer profile supplement on the System for Electronic Disclosure by Insiders (SEDI).
Failure to file a material change report.
Failure to provide a written update after filing a confidential report of a material change.
Failure to file a business acquisition report.
Failure to file annual oil and gas disclosure prescribed by National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities (NI 51-101) or technical reports for a mineral project required under NI 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).
Failure to file a mandatory news release.
Failure to file corporate governance disclosure as required by national Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101).
Failure to file audit committee disclosure as required by Multilateral Instrument 52-110 Audit Committees (MI 52-110) or BC Instrument 52-509 Audit Committees.
Failure to include disclosure in an issuer’s MD&A relating to disclosure controls and procedures and their direct effectiveness that is referred to in a certificate filed under MI 52-109.
Financial statements of the reporting issuer, or the auditors’ report accompanying the financial statements, do not comply with the requirements of NI 51-102 Continuous Disclosure Obligations (NI 51-102), National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) or National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107).
The reporting issuer has acknowledged that its financial statements, or the auditors’ report accompanying the financial statements, may no longer be relied upon.
The reporting issuer’s AIF, MD&A, MRFP, information circular, or business acquisition reports do not contain information for each of the content items required by NI 51-102 or NI 81-106.
The reporting issuer’s technical disclosure or other reports do not comply with the disclosure requirements of NI 43-101 or 51-101.
Failure to pay a fee required by the Act or the regulations.
Failure to comply with any other requirement related to continuous disclosure.