Principal-protected Notes Regulations

Marginal note:Information that must be disclosed

3 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.