CSA Continue Efforts to Reduce Regulatory Burden for Investment Funds

Introduction

On January 22, 2026, the Canadian Securities Administrators (the “CSA”) published a notice (the “Notice”) adopting certain amendments to National Instrument 81‑101 – Mutual Fund Prospectus Disclosure, National Instrument 81‑102 – Investment Funds, National Instrument 81‑106 – Investment Fund Continuous Disclosure (“NI 81-106”) and National Instrument 81‑107 – Independent Review Committee for Investment Funds (“NI 81-107”) — together with associated changes to the commentary in NI 81‑107 (collectively, the “Amendments”). The Amendments form part of the CSA’s Modernization of the Continuous Disclosure Regime for Investment Funds (the “CD Modernization Project”), which in aggregate represent a significant re‑ordering of how continuous disclosure obligations for prospectus-qualified investment funds are structured and delivered. The Amendments are scheduled to come into force on April 22, 2026.

Background

The CD Modernization Project originates in the CSA’s broader burden‑reduction and regulatory modernization initiatives. In September 2019, the CSA published “Reducing Regulatory Burden for Investment Fund Issuers – Phase 2, Stage 1” for comment, followed by publication of final amendments in October 2021 that reflected feedback from market participants and other stakeholders. In parallel, the Ontario Securities Commission released “OSC Staff Notice 11‑784 – Burden Reduction”, and the Ontario government’s Capital Markets Modernization Taskforce issued its final report in January 2021, both of which informed the CSA’s ongoing review of disclosure obligations applicable to investment funds.

The CSA subsequently embedded burden reduction as a core policy objective in its 2022–2025 Business Plan, committing to “smart and responsive” securities regulation that protects investors while addressing inefficiencies in existing regulatory frameworks. Against this backdrop, the CSA undertook a review of investment fund continuous disclosure requirements, concentrating on provisions of NI 81‑106 that are not mandated by International Financial Reporting Standards (“IFRS”), as well as select disclosure and reporting obligations contained in other national instruments and provincial securities legislation.

Proposed amendments implementing the CD Modernization Project were published for comment on September 19, 2024, with the comment period extended to January 31, 2025. The CSA received 26 comment letters, 13 of which addressed the workstreams ultimately finalized in the Notice. After reviewing these submissions, the CSA made limited, non‑material revisions — principally to clarify the scope and mechanics of related‑party transaction reporting — before adopting the Amendments without a further comment period.

The CD Modernization Project

The stated objective of the CD Modernization Project is to modernize the continuous disclosure regime governing investment funds by enhancing the utility of investment fund disclosure for investors while reducing the regulatory burden for investment fund managers (“IFMs”). The CD Modernization Project is structured around several discrete workstreams and initiatives, each addressing a different aspect of investment fund disclosure and reporting. The Notice finalizes amendments associated with Workstream Two, Workstream Three and the Additional Simplified Prospectus (SP) Disclosure Initiative, while confirming that Workstream One and the Additional Fund Expense Ratio (FER) Initiative remain under development.

Workstream Two – Related‑Party Transaction and Conflict‑of‑Interest Reporting

Workstream Two alters the manner in which investment funds report certain related‑party transactions and conflicts of interest. The CSA have replaced overlapping and jurisdiction‑specific statutory reporting requirements with a single, standardized reporting framework centred on a new Form 81‑107A – Conflict Reporting Form for Related Issuer Purchases (“Form 81-107A”). Under this approach, filing a compliant Form 81‑107A displaces parallel conflict‑of‑interest reporting obligations otherwise imposed under securities legislation.

In conjunction with Form 81‑107A, IFMs are now required to prepare an annual Manager’s Report on Related Party Transactions under new section 2.5 of NI 81‑107. This Report must summarize related‑party transaction reports filed during the financial year, provide high‑level disclosure of other related‑party transactions not otherwise reported and must be included as an appendix to the Independent Review Committee’s annual report to securityholders. The CSA have deliberately aligned the scope of this obligation with transactions involving an “entity related to the manager”, removing broader formulations that commenters indicated could create uncertainty or excessive scope.

The CSA view this change as eliminating duplicative filings while preserving investor access to relevant conflict‑of‑interest information in a single, standardized location. Transitional relief applies such that investment funds compliant with existing reporting requirements as of April 21, 2026 are not required to adopt the amended regime until January 1, 2027.

Workstream Three – Elimination of Certain Class‑ or Series‑Level Disclosure

Workstream Three addresses what the CSA identified as low‑utility, high‑burden class‑ or series‑level disclosure in investment fund financial statements. The Amendments remove requirements under NI 81‑106 to present class‑ or series‑level information in the Statement of Comprehensive Income, the Statement of Changes in Financial Position, and related notes where such disclosure is not required under IFRS.

The CSA concluded that this information provides limited incremental value to investors — particularly where equivalent information is available in prospectuses, Fund Facts or ETF Facts — and imposes disproportionate preparation costs on investment funds. Importantly, the CSA determined that these changes are consistent with IFRS principles and aligned the effective date of the Amendments, including the end of related transition periods, with the anticipated January 1, 2027 implementation of IFRS 18 – Presentation and Disclosure in Financial Statements.

Additional Simplified Prospectus Disclosure Initiative

The Additional Simplified Prospectus Disclosure Initiative comprises targeted technical and structural amendments to Form 81‑101F1 – Contents of Simplified Prospectus (“Form 81-101F1”), responding to feedback following amendments that came into force in January 2022. These changes primarily address formatting, introductory disclosure and the efficient presentation of information in multi‑fund simplified prospectuses, with a view to enhancing clarity without altering substantive disclosure content. No transition period applies to the amendments to Form 81-101F1, which will take effect alongside the other Amendments on April 22, 2026.

Conclusion

The Amendments adopted as part of the CSA’s CD Modernization Project represent a meaningful recalibration of continuous disclosure obligations for prospectus‑qualified investment funds, aimed at reducing duplicative and low‑utility requirements while preserving investor protection. IFMs should review the finalized changes in light of their existing disclosure, conflict‑of‑interest reporting and financial statement practices, particularly given the staged transition periods and forthcoming IFRS‑related developments. Early assessment and implementation planning will be key to ensuring compliance ahead of the April 22, 2026 effective date and subsequent transition milestones.

If you have any questions with respect to the matters discussed above, please contact Ron Schwass by email at [email protected]. The author gratefully acknowledges the assistance of articling student Malindu Danthanarayana in the preparation of this update.

This update is intended as a summary only and should not be regarded or relied upon as advice to any specific client or regarding any specific situation.

If you would like further information regarding the issues discussed in this update or if you wish to discuss any aspect of this commentary, please feel free to contact us.