OSC Updates NI 31-103 With Fee Disclosure

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The Ontario Securities Commission released a bulletin on August 20, 2026 that modifies National Instrument 31‑103 to require Canadian principal distributors of reporting‑issuer mutual funds to disclose the maximum fee they receive from fund managers.

New footnote requirement for principal distributors

The amendment adds paragraph (v) to subsection 14.17(1), the part of the instrument that tells firms what to include in client reports. When a client holds securities of a reporting‑issuer mutual fund, the firm acted as the principal distributor, and it received a payment for services that isn’t already covered by paragraphs (g) or (h), a footnote – or a substantially similar notice – must be added.

The required language is explicit. It reads: “We have an exclusive right to distribute the securities of mutual funds managed by [insert name of fund manager]. [Insert name of fund manager] pays us up to a maximum of [insert percentage of the management fee] % of the fund’s management fee for providing services as a principal distributor.”

Definition of “principal distributor” follows section 1.1 of National Instrument 81‑102, which governs investment funds. The footnote is meant to give investors a clear view of any financial interest the distributor holds, regardless of how the fee arrangement is structured.

Timeline and regional differences

The amendment itself takes effect on January 1, 2027. Firms may continue to follow the rules as they stood on December 31, 2026 until January 1, 2029, at which point the footnote disclosure becomes mandatory. In Saskatchewan, the rule comes into force on the day a filing is made with the Registrar of Regulations after the January 1 date.

The companion policy guidance, which sits just before the existing guidance on “Reporting information when approximations are used,” also becomes effective on January 1, 2027. It clarifies that a payment disclosed under paragraph (v) does not need to be repeated under paragraph (g), preventing duplicate reporting of the same amount.

Firms that operate a principal distributor model now have a concrete item to work into their client reporting, along with clearer guidance on what does – and doesn’t – need to be disclosed twice.

Companies will need to adjust their reporting templates to include the new footnote. The amendment does not alter other reporting obligations under NI 31‑103, but it does add a specific disclosure that was previously optional.

Overall, the change gives investors a clearer picture of the financial relationships behind the funds they own, while giving firms a defined deadline to bring their reports into line with the new standard.