CSA 93/05 - National Policy Statement No. 39 - Mutual Funds, Section 16 - Sales Communication [CSA Notice - Rescinded]

The Canadian Securities Administrators (The "CSA") published amendments to National Policy Statement No. 39 ("N.P. 39") which resulted in section 16 of N.P. 39 being deleted in its entirety and being replaced with a revised section 16 (the "revised section 16") which establishes guidelines regarding mutual fund sales communications. The effective date of the revised section 16 was August 1, 1992.

In the revised section 16, sales communication is defined, in part, as any oral or written communication used to induce the purchase of securities issued by a mutual fund. The revised section 16 requires that most sales communications, including broadcast television and radio advertisements, include certain warnings as set out in section 16.06 of N.P. 39 ("warnings").

Since the revised section 16 became effective, various mutual fund industry participants have raised the question of whether "image advertisements" which are intended to promote a corporate identity or the expertise of a mutual fund manager must contain warnings. The CSA are of the view that, where an advertisement or other communication does not refer to a specific mutual fund or funds and does not promote any particular investment portfolio or strategy, such an advertisement or other communication is not a "sales communication" as defined in subsection 16.01(a) of N.P. 39 because it cannot be said to "induce the purchase of securities issued by a mutual fund" and therefore need not contain warnings. This applies to both print and broadcast (radio or television) advertisements or other communications.

For further information or clarification please contact any of:

Robert Bouchard                                                                      Susan I. McCallum
Deputy Director, Corporate Finance                                     Director, Corporate Finance
Ontario Securities Commission                                          The Manitoba Securities Commission
(416) 593-8248                                                                         (204) 945-2548

Johanne Duchesne                                                                  Wayne Redwick
Deputy Director, Financial Operations                                  Deputy Superintendent, Corporate Finance
Commission Des Valeurs Mobilieres Du Quebec             British Columbia Securities Commission
(514) 873-5326                                                                          (604) 660-4800

Susan Wolburgh Jenah                                                            Ron Sczinski
Deputy Director, Policy                                                              Chief of Securities Administration
Ontario Securities Commission                                             Alberta Securities Commission
(416) 593-8245                                                                          (403) 427-5201