The Investment Dealers Association of Canada is pursuing an amendment, and interim relief, to new rules regarding communication with beneficial owners of securities.

Under the new rule, National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer, IDA member firms must obtain instructions from clients who are beneficial owners of securities of reporting issuers.

The instructions relate to whether clients object to the disclosure of their personal information to the issuers and other third parties or, alternatively, wish to receive certain materials from the reporting issuers.

Since July 1, 2002, firms are required to provide each new client with an “explanation to client” and a “client response form”, and obtain instructions from the client before holding securities on its behalf.

For clients who do not object to disclosure, firms are required to obtain new instructions from all of these clients before January 1, 2004.

However, the IDA says that based on experience to date, it is not practical to expect firms to be able to obtain new instructions from all of their clients by the deadline or otherwise. “Following submissions made to, and discussions with, the Canadian Securities Administrators, the CSA is proposing an amendment… to eliminate the requirement for members to obtain new Instructions,” it reports.

However, the IDA says that, based on the required process, the proposed amendment will not likely be implemented by the deadline either. “Accordingly, the IDA will make an application to the CSA in the next few weeks to seek the required exemptive relief to bridge the gap of time from the deadline until the amendment comes into force.”