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Principal Protected Notes Regulations

Version of section 3 from 2016-06-14 to 2020-03-15:

Marginal note:Information that must be disclosed

 Subject to sections 4 to 6, an institution must provide — at least two days before entering into an agreement to issue a principal protected note to an investor — a synopsis of the following information to the investor orally, by means of a person who is knowledgeable about the terms and conditions of the note, and in writing:

  • (a) the term of the note, and how and when the principal is to be repaid and the interest, if any, is to be paid;

  • (b) any charges and their impact on the interest payable;

  • (c) how interest is accrued, and any limitations in respect of the interest payable;

  • (d) any risks associated with the note, including, if applicable, the risk that no interest may accrue;

  • (e) the distinction between principal protected notes and fixed-rate investments with respect to the levels of risk and return;

  • (f) the circumstances in which a principal protected note could be an appropriate investment;

  • (g) if the note relates to a deposit that is not eligible for deposit insurance coverage by the Canada Deposit Insurance Corporation, the fact that it is not eligible;

  • (h) whether the note may be redeemed before its maturity and, if so, that redemption before maturity may result in the investor receiving less than the principal amount;

  • (i) the terms and conditions of any secondary market offered by the institution;

  • (j) whether the investor may cancel their purchase of the note and, if so, how the purchase may be cancelled;

  • (k) whether the note provides that the institution may amend the note and, if so, in what circumstances;

  • (l) whether the manner in which the note is structured or administered may place the institution in a conflict of interest;

  • (m) any other information that could reasonably be expected to affect an investor’s decision to purchase the note; and

  • (n) that the information referred to in section 8 is available on request and that the information referred to in section 9 is available on request after the note is issued.

  • SOR/2016-142, s. 3(F)

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