Bare Trustee Agreements

Mutual Fund Bare Trustee Agreements

The Mutual Fund Bare Trustee agreement is an agreement between a custodian and IIROC (on behalf of Dealer Members) outlining the terms upon which the Dealer Member's inventory and customer securities are deposited with the custodian. IIROC is acting as bare trustee on behalf of Dealer Members. The custodian is a mutual fund or mutual fund manager and this agreement includes provisions to prevent the custodian from using or disposing of the securities without the prior written consent of the Dealer Member and to allow for the prompt delivery of the securities to the Dealer Member on-demand or where the securities are book-entry only securities, the prompt transfer from the custodian or to another person's account at the custodian. This agreement does not allow set off and the securities must be held in segregation for the Dealer Member or its customers free and clear of any charge, lien, claim, or encumbrance of any kind. Dealer Member Rule 2000, Segregation Requirements, requires a Dealer Member to have a written custody agreement executed with a custodian when securities are held beyond the physical possession of the Dealer Member. For convenience and to reduce the need for the mutual fund or mutual fund manager to enter into an individual written agreement with each Dealer Member with whom it deals, IIROC has agreed to enter into this agreement as a bare trustee on behalf of those Dealer Members.

Download the Mutual Fund Bare Trustee Agreement form (pdf)


Frequently Asked Questions


  1. What is the purpose of the bare trustee agreement?

    One of the ways for book entry investment products (including investment funds, segregated funds, guaranteed investment certificates and other evidence of deposits) distributed by an issuer or its agent to be considered held at an acceptable securities location, is for the issuer or its agent to sign a prescribed custody agreement with IIROC. The custody agreement includes the terms upon which such securities are deposited and includes provisions that no use or disposition of the securities shall be made without the prior written consent of the Dealer Member and the securities can be delivered to the Dealer Member promptly on demand. IIROC has executed these agreements on behalf of its members to reduce the need for the issuer or its agent to enter into individual agreements with each Dealer Member it deals with. As an alternative, an issuer or its agent may sign the prescribed custody agreement directly with the IIROC Dealer Member.


  2. How often is the approved bare trustee list produced?

    The approved listing for bare trustee agreements is updated and produced monthly, and is posted on the IIROC website under “Dealer Member Rules / IIROC Notices”.


  3. What administrative role does IIROC play in approving the bare trustee agreement?

    IIROC’s predecessor, the Investment Dealers Association), and the Canadian Investor Protection Fund (CIPF) entered into an Agreement dated May 9, 2005, in which all existing custody agreements executed in the name of the CIPF as bare trustee have been assigned to IIROC to administer on a go-forward basis. In the administration of these custody agreements, IIROC carries out due diligence to ensure that the bare trustee agreement is in the prescribed form and is duly executed by those in authority. Copies of the agreement on file are available upon request.


  4. What is the role of the Dealer Member?

    It remains the responsibility of the Dealer Member to carry out product due diligence and suitability assessment of investments sold to clients.


  5. What is the role of a Fund Manager?

    To understand the extent of the activities and role that a fund manager (sometimes referred to as a fund administrator) plays, the following are many of its primary functions:

    • Calculating the Net Asset Value (NAV) and the NAV per share or unit
    • Keeping the accounts and financial records
    • Preparing the annual audit file and liaising with the auditor
    • Liaising with the fund advisor, the custodian, the brokers and other service providers
    • Liaising with prospective investors and sending out the offering documentation
    • Calculating, confirming and arranging payment of all subscriptions, redemptions, fees and expenses, and arranging for the payment of all dividends or other distributions, if required
    • Maintaining the statutory books and records
    • Acting as registrar and transfer agent, handling the registration of shares and liaising with shareholders with regard to subscriptions, redemptions and transfers
    • Carrying out anti-money laundering due diligence with regard to investors
    • Acting as company secretary, responsible, amongst other things, for arranging board meetings, calling the annual general meeting and preparing board minutes
    • Maintaining a copy of the share register at its offices and, if the administration is not resident in the domicile of the fund, ensuring that the original share register is held in the registered office in that jurisdiction, and
    • Ensuring that the fund complies with the terms of its offering memorandum.

  6. What is the required documentation for including a Fund Manager on the monthly IIROC bare trustee custodial agreement listing?

    • Two signed copies of the bare trustee agreement (not negotiable in terms of amending the agreement).
    • Proof that the Fund Manager or Fund Advisor is registered with either a Provincial Securities Commission as an Investment Fund Manager or the Office of the Superintendent of Financial Institutions (OSFI). Any other type of securities registration will be reviewed by IIROC for approval. The fund manager is defined as the entity responsible for the fund administration. See question 5 above.
    • Copy of the offering memorandum (or prospectus if applicable).
    • A corporate resolution for signing authority.
    • Articles of incorporation.
    • A letter from an IIROC Dealer Member confirming that they will be distributing the investment product.