Canada's Securities Regulators Release Rule Aimed At Fund Governance

The Canadian Securities Administrators announced Monday that a new rule designed to improve how publicly offered investment funds are governed has gone into effect. The rule, titled "National Instrument 81 107 Independent Review Committee forInvestment Funds," requires fund managers to

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The Canadian Securities Administrators announced Monday that a new rule designed to improve how publicly offered investment funds are governed has gone into effect.

The rule, titled “National Instrument 81-107-Independent Review Committee forInvestment Funds,” requires fund managers to maintain independent oversight of their management and to monitor of conflicts of interest.

The rule also requires fund managers to create an Independent Review Committee to follow potential conflicts of interest fund managers may face. The committee will be charged with either approving a manager’s decision in how to approach the conflict or to offer a recommendation in how the conflict ought to be addressed.

“This rule will ensure the interests of the fund, and ultimately the investor, are at the forefront when a fund manager is faced with a conflict of interest,” said Jean St-Gelais, chair of the CSA and president and CEO of the Autorit des marchs financiers. “Also, managers of investment funds will benefit from having the perspective of an independent body when they encounter actual or perceived conflicts of interest.”

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