SEC Proposes Rules Re Canadians' Retirement AccountsWashington, DC, March 31, 1999 - On March 19, 1999, the U.S. Securities and Exchange Commission proposed exemptive rules under the federal securities laws to permit Canadians who reside in the U.S. or who are temporarily present in the U.S. to purchase Canadian securities, including Canadian mutual funds, for their Canadian retirement accounts. The proposals respond to issues raised in a rulemaking petition filed with the Commission by the Investment Funds Institute of Canada. Comments on the proposals are due to the Commission by May 28, 1999. There are three parts to the Commission's proposal: - Proposed rule 237 under the Securities Act of 1933 would permit foreign securities to be offered to Canadians in the US and sold to their Canadian tax-deferred retirement accounts without being registered under the 1933 Act.
- Proposed rule 7d-2 would allow Canadian investment companies to be offered and sold to Canadians in the US for purchase through their tax-deferred retirement accounts without being registered under the Investment Company Act of 1940.
- A proposed amendment to Exchange Act rule 12g3-2 would provide that participants who hold shares of a foreign private issuer only through their Canadian retirement accounts do not have to be counted in determining whether the issuer has fewer than 300 shareholders who reside in the US.
The Canadian retirement accounts covered by the Commission's proposals are self-directed tax-deferred retirement accounts that are similar to U.S. individual retirement accounts. The proposals are intended to allow Canadians who established these accounts while in Canada, and who now reside or are temporarily present in the US, to make changes in the investments in the accounts to meet their individual retirement goals. The proposed relief would not include exemptions from the antifraud provisions of the federal securities laws or from any applicable state laws.
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