CSA Continues Work to Modernize Continuous Disclosure for Investment Funds

The Canadian Securities Administrators (CSA) have finalized amendments to various National Instruments and announced continuing work to modernize the continuous disclosure regime for investment funds (CD Modernization Project). The CD Modernization Project includes three workstreams and two initiatives which aim to:

• replace the annual and interim Management Report of Fund Performance (MRFP) with a new annual and interim Fund Report (Workstream One) and contemplate references to the Fund Expense Ratio (FER) in certain documents as an additional initiative (Additional FER Initiative); and
• provide exemptions to streamline related party reporting (Workstream Two), eliminate certain required class- or series-level disclosures from investment fund financial statements (Workstream Three) and revise the version of Form 81-101F1–Contents of Simplified Prospectus that became effective on January 6, 2022 as an additional initiative (Additional SP Disclosure Initiative).

The CSA has finalized amendments and changes to various National Instruments in furtherance of Workstream Two, Workstream Three and the Additional SP Disclosure Initiative. The amendments become effective on April 22, 2026, although amendments related to Workstream Two and Workstream Three have a transition period until January 1, 2027.

The CSA is continuing work on Workstream One and the Additional FER Initiative and will issue a publication on those items in the future.

Workstream One and Additional FER Initiative

On an annual and interim basis, investment funds are required to file an MRFP, which contains comprehensive disclosure on, among other things, management discussion of fund performance, financial highlights, the investment portfolio of the fund and other material information. As part of Workstream One, the CSA intends to introduce a new Fund Report that:

1. significantly revises the content of the MRFP to be more streamlined;
2. is significantly less burdensome for investment fund managers (IFMs) to prepare for reporting issuer investment funds; and
3. is more likely to be read and understood by investors compared to the MRFP.

As part of the Additional FER Initiative, the CSA intends to introduce FER references in the Fund Facts and ETF Facts summary disclosure documents, which all mutual funds and exchange-traded funds (ETFs) are required to file. The FER describes the sum of the management expense ratio and the trading expense ratio of an investment fund. The FER was implemented into certain regulatory documents during past CSA initiatives and is proposed to be used in the new Fund Report. The CSA is contemplating including references to the FER into the Fund Facts and ETF Facts documents for consistency.

Workstream Two, Workstream Three and the Additional SP Disclosure Initiative

The amendments relating to Workstream Two replace the overlapping statutory reporting requirements for related party transactions with a standardized framework under National Instrument 81‑107–Independent Review Committee for Investment Funds (NI 81‑107). Securities rules in a number of jurisdictions require IFMs to file reports regarding certain types of related party transactions, and in some cases these requirements substantially replicate those already found in NI 81‑107. To enhance clarity, the amendments provide exemptions from these overlapping statutory reporting obligations and implement a standardized reporting approach under NI 81‑107. This includes a new requirement for managers to prepare an annual Manager’s Report on Related Party Transactions to be appended to the independent review committee’s report to securityholders, as well as a new Form 81‑107A–Conflict Reporting Form for Related Issuer Purchases for use when filing prescribed related party transaction reports.

The amendments relating to Workstream Three remove the requirement to prepare certain class or series-level disclosures in an investment fund's financial statements, in alignment with International Financial Reporting Standards (IFRS). Presently, National Instrument 81-106–Investment Fund Continuous Disclosure (NI 81-106) requires class or series-level disclosure on various particulars in the Statement of Comprehensive Income, the Statement of Changes in Financial Position and the notes to the financial statements of a reporting issuer investment fund. Such disclosure can be lengthy, complex and difficult to understand, particularly if the investment fund has multiple classes or series.

The amendments relating to the Additional SP Disclosure Initiative make editorial edits to Form 81-101F1 in response to feedback received by the CSA, and in total the amendments involve changes to the following:

• National Instrument 81-101–Mutual Fund Prospectus Disclosure
• National Instrument 81-102–Investment Funds
• NI 81-106
• NI 81-107, along with certain changes to the Commentary of NI 81-107

Taken together, the amendments and the continuing work related to Workstream One and the Additional FER Initiative reflect the CSA’s ongoing commitment to improving investment fund continuous disclosure for market participants.

If you have any questions, please contact a member of the Bennett Jones Capital Markets group