Canadian Securities Registration Requirements - Foreign Firm

What are the Canadian securities registration requirements for foreign firms or foreign companies that advise Canadian clients?

Engaging in the business of advising or trading in securities in Canada requires registration in each Canadian province or territory where the activities are undertaken, unless the firm or individual is relying on an exemption from the registration requirement.  

What are the categories of securities registration in Canada?

The three most common securities registration categories in Canada are investment adviser, investment dealer, and investment fund manager.  

What is an investment adviser?  Engaging in the business of advising in securities requires registration as an “adviser”.

What is an investment dealer? Engaging in the business of trading in securities requires registration as a “dealer”.

What is an investment fund manager?  Registration as an “investment fund manager” is required if a person or company directs or manages the business, operations or affairs of one or more investment funds. 

Are there any exemptions for foreign firms or foreign companies?

There are several exemptions to the registration requirements for foreign firms (or international firms), some of which include: 

- International Adviser Exemption

- International Sub-Adviser Exemption

- International Dealer Exemption

What is the International Adviser Exemption?

The international adviser exemption allows advisers with their head office or principal place of business in a foreign jurisdiction to advise certain “permitted clients” in Canada on “foreign securities” without having to register with the Canadian securities regulators. The adviser may also advise on securities of Canadian issuers, but only to the extent that the advice is incidental to its acting as adviser to foreign securities. The adviser is subject to certain other conditions including that the adviser: must be registered to perform such functions in the foreign jurisdiction or be operating under an exemption from registration; engages in the business of an adviser in the foreign jurisdiction; only a prescribed amount of their gross revenue is derived from portfolio management activities in Canada; provides certain client disclosures; appoints an agent for service; and notifies the Canadian securities regulator. 

What is the International Dealer Exemption?

The international dealer exemption allows dealers with their head office or principal place of business in a foreign jurisdiction to conduct certain, limited and prescribed trading activities, with a prescribed category of clients. The dealer is subject to other conditions including that the dealer: must be registered to perform such functions in the foreign jurisdiction; engages in the business of a dealer in the foreign jurisdiction; is trading as principal or agent for (i) the issuer of the securities; (ii) a “permitted client” ; or (iii) a person or company that is not a resident of Canada; appoints an agent for service; and notifies the Canadian securities regulator. 

What is the International Sub-Adviser Exemption?

The international sub-adviser exemption permits a foreign sub-adviser with their head office or principal place of business in a foreign jurisdiction to provide advice to registered advisers or registered dealers (“Canadian registrant”), without having to register as an adviser in Canada. In these scenarios, the Canadian registrant is the foreign sub-adviser’s client, and the Canadian registrant receives the advice, either for its own benefit or for the benefit of its clients. Some of the conditions of this exemption are that: (a) the Canadian registrant has entered into an agreement with its clients that it is responsible for losses that arise out of certain failures by the foreign sub-adviser; (b) the foreign sub-adviser has entered into a written agreement with the Canadian registrant setting out the obligations and duties of the foreign sub-adviser; (c) the foreign sub-adviser must be registered to perform such functions in the foreign jurisdiction or be operating under an exemption from registration; and (d) the foreign sub-adviser engages in the business of an adviser in the foreign jurisdiction. 

While they each have their limitations, the international adviser exemption, international sub-adviser exemption, and international dealer exemption may be an option for certain foreign advisers. Please contact Registrant Law to learn the details about the exemptions and whether you qualify. 

How can a foreign firm or foreign companies with Canadian clients get registered with the Canadian securities regulators?

Some foreign firms may wish to become registered with the Canadian securities regulatory authorities instead, for example, with the Ontario Securities Commission or the British Columbia Securities Commission.  They may not qualify for the registration exemptions or may wish to conduct activities beyond what is permitted under the exemptions.  There are numerous initial and ongoing requirements for registration, and individuals must meet certain industry experience and/or education requirements.  Registrant Law helps foreign firms and individuals better understand the Canadian securities registration requirements and the process for registrations.