Guidance for changes in calculating capital markets participation fees by registrant firms, unregistered exempt international firms and unregistered investment fund managers effective April 1, 2013

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November 20, 2013

 

Guidance for changes in calculating capital markets participation fees by registrant firms, unregistered exempt international firms and unregistered investment fund managers effective April 1, 2013

OSC Rule 13-502 Fees (amended effective April 1, 2013) changed the way capital markets participation fees are calculated by registrant firms, unregistered exempt international firms and unregistered investment fund managers. This email is intended to assist these firms in correctly calculating their 2013 capital markets participation fees (participation fees). Firms are required to submit these calculations using the Form 13-502F4 Capital Markets Participation Fee Calculation (Form 13-502F4) or Form 13-503F1 (Commodity Futures Act) Participation Fee Calculation (Form 13-503F1). Information on how registrant firms, unregistered exempt international firms and unregistered investment fund managers should calculate their participation fees is set out below.

Registered firms, unregistered exempt international firms and unregistered investment fund managers are now required to use a reference fiscal year to calculate their participation fees.

For most of these firms, the reference fiscal year will be their last fiscal year ending before May 1, 2012 (see example #1 below). 

However, some firms will use their 2013 fiscal year as their reference year when calculating their capital markets participation fee this year. This will include: 

  • Firms that became registered, were unregistered exempt international firms or were unregistered investment fund managers in Ontario for the first time on or after May 1, 2012 (see example #2 below).
  • Firms that became registered in Ontario, were unregistered exempt international firms or were unregistered investment fund managers before May 1, 2012 but had not yet completed a fiscal year (see example #3 below).

Examples

Example 1:
Firm ABC Ltd. was registered as an exempt market dealer on July 10, 2010. Its fiscal year end is December 31.
Since ABC Ltd. was a registrant at the end of the last fiscal year ending before May 1, 2012, ABC Ltd. will use its fiscal year ending December 31, 2011 as its reference fiscal year.


Example 2:
Firm DEF Inc. was incorporated on March 10, 2012 and registered as an investment fund manager on July 31, 2012. Its fiscal year end is August 31.
Since DEF Inc. was not a registered firm at the end of the last fiscal year ending before May 1, 2012, DEF Inc. will use its fiscal year ending August 31, 2013 as its reference fiscal year.


Example 3:
Firm GHI Inc. was incorporated on January 1, 2012 and registered as a Portfolio Manager on March 31, 2012. Its fiscal year end is December 31.
Since GHI Inc. had not experienced a fiscal year before May 1, 2012, GHI Inc. will estimate its specified Ontario revenues based on its anticipated Ontario revenues for the fiscal period ended December 31, 2013. Firm GHI Inc. will then need to determine its actual specified Ontario revenues not later than 90 days after its December 31 fiscal year end and make any adjusted filings and payments required as set out in section 3.5 of OSC Rule 13-502 Fees.

Due Dates
With the exception of the unregistered investment fund manager firms specifically referred to below, firms are required to submit Form 13-502F4 or Form 13-503F1 by December 1, 2013 and pay participation fees by December 31, 2013.

Firms which are unregistered investment fund managers only (and not registered in any category nor relying on the international adviser or international dealer exemption) are required to file the Form 13-502F4 and pay their capital markets participation fees no later than 90 days after their fiscal year end. 

Late fees will apply for forms and participation fees submitted after the due dates and will continue to accrue each business day that they remain outstanding. 

References
For more information, see OSC Rule 13-502 Fees and OSC Rule 13-503 (Commodity Futures Act) Fees.
Also, see OSC Staff Notice 33-741 Report on the Results of the Reviews of Capital Markets Participation Fees for guidance on suggested practices in the calculation of capital markets participation fees. 

Questions
If you have any questions concerning the calculation of capital markets participation fees, please refer them to any of the following:

Allison McBain, Registration Supervisor
Tel: (416) 593-8164
Email: [email protected]

Oriole Burton, Registration Supervisor
Tel: (416) 204-8962
Email: [email protected]

Jonathan Yeung, Senior Financial Analyst
Tel: (416) 595-8924
Email: [email protected]