The investment fund industry is seeking clarification from the Canadian Securities Administrators on a number of outstanding issues stemming from the February 23 federal budget, particularly the scrapping of the foreign content limits.

Following a meeting with fund managers, John Murray, vice president, regulation and corporate affairs, at the Investment Funds Institute of Canada, said the industry has contacted the CSA to try to clear up key matters that affect investors and fund companies alike.

Fund companies are positive about the removal of the 30% cap, saying it will provide investors with more flexibility in their investment options. But many fund managers participating in today’s IFIC conference call expressed concern about moving too hastily in some areas, said Murray. “These are complex issues,” he said. “Fund managers’ fiduciary duty requires them to carefully consider all of the ramifications for investors inherent in a change of this nature.”

Securities regulations require certain steps be taken before significant changes are made to a fund. The removal of the foreign content cap may mean suitability requirements have to be updated for the investor. Similarly, if the investment objectives of a fund change, fund managers want to know if the declaration of trust that set up the fund needs to be reworded and approved by unitholders before moving ahead with removing the 30% cap. Whether prospectuses need to be reworded must also be considered, said Murray.

Last week, IFIC also asked the Canada Revenue Agency for clarification on tax issues regarding the removal of the 30% limit on foreign content.