33-502 - Disclosure of Sales Charges

Securities Act
R.S.P.E.I. 1988, Cap-S-3.1

Document Type: Local Rule
Document No: 33-502
Subject: Scholarship Plan Dealers - Disclosure of Sales Charges
Effective Date: March 17, 2008

Local Rule 33-502 Scholarship Plan Dealers - Disclosure of Sales Charges

Part 1 Definitions

1.1 In this Rule:

“dealer” means a scholarship plan dealer;

“purchaser” means a person who purchases a scholarship plan security;

“sales charge” includes charges relating to the cost of the establishment of a scholarship plan or educational plan or trust and the cost of the continuing administration and maintenance of the plan or trust;

“salesperson” means a registered salesperson or trading officer of a dealer;

“scholarship plan security” means an interest in a scholarship or educational plan or trust.

Part 2 Purpose and Application

2.1 This Rule requires dealers and salespersons to provide point-of-sale disclosure about sales charges to each purchaser of a scholarship plan security.

2.2 This Rule applies to all dealers and salespersons selling scholarship plan securities in Prince Edward Island.

Part 3 Disclosure

3.1 All dealers and salespersons must provide disclosure to purchasers about sales charges in connection with scholarship plan securities in accordance with the following terms:

(a) The disclosure must be in writing;

(b) The disclosure must be in a separate document from the prospectus;

(c) If the disclosure is part of another document, such as an application form, it must be in bold print which is larger than the print in the rest of the document.

(d) The disclosure must be in point form and contain the following information:

(i) the fact that the purchaser must pay a sales charge,

(ii) the amount of sales charge per unit,

(iii) the total number of units purchased,

(iv) the total sales charge,

(v) the fact that the sales charge is deducted from early deposits and a schedule of deductions,

(vi) the fact that the purchaser has the right to withdraw from the plan within 60 days after signing the subscription without paying any sales charge, and

(vii) the fact that the sales charge will be deducted from the purchaser’s contributions if the purchaser withdraws from the plan after 60 days.

3.2 The disclosure must be verbally explained by the salesperson to the purchaser at the time of the purchase until the salesperson is satisfied that the purchaser fully understands the sales charges.

3.3 The disclosure must be initialed by the salesperson and the purchaser.

3.4 The form of disclosure must be approved by the Superintendent before it is used.

Part 4 Effective Date

4.1 This Rule comes into effect on March 17, 2008.