Provincial securities regulators have approved rule amendments that allow mutual fund dealers to funnel commissions through a personal corporation.

The Ontario Securities Commission announced in Friday’s OSC Bulletin that it has approved amendments to a rule of the Mutual Fund Dealers Association of Canada regarding the payment of commissions to an unregistered corporation.

In addition, the Alberta Securities Commission, the Manitoba Securities Commission, New Brunswick Securities Commission, Nova Scotia Securities Commission, and Saskatchewan Financial Services Commission approved, and the British Columbia Securities Commission did not object to the MFDA’s proposal.

The amendments allow fund dealer reps to have remuneration from their firm paid directly to an unregistered corporation, subject to certain conditions.

The ability to pass commission revenue through a corporation (a tax-saving measure) only applies to remuneration from business conducted by a rep on behalf of an MFDA member. This does not apply to remuneration derived from a client in Alberta however. And, it does not allow the unregistered corporation to conduct any trading or advising activities.

The MFDA’s proposal to allow the use of personal corporations was published for comment on June 19, 2009, and some changes have been made to the proposal since it was initially published for comment.

The OSC Bulletin includes the final version of the rule, a summary of the comments the MFDA received on the proposal, as well as its responses.

IE