OSC Investor News
Improving scholarship plan disclosure for investors
March 24, 2010 -
Canadian securities regulators have released for public comment proposed amendments to National Instrument 41-101 General Prospectus Requirements and Form 41-101F2 Information Required in an Investment Fund Prospectus. The proposal aims to provide investors with more meaningful and effective disclosure about scholarship plans, and includes a new prospectus form for scholarship plans.
A scholarship plan is a type of Registered Education Savings Plan (RESP) used by Canadians to help save for a child’s education. These plans have unique features and can be more complex than other types of RESPs. Providing clearer and simpler disclosure should help investors better understand these plans and make more informed investment decisions.
Central to the proposal is a new Plan Summary document that will highlight the potential benefits, risks and costs of investing in a scholarship plan. It must be written in plain language, will generally be no more than three pages and must be delivered with the prospectus. The scholarship plan prospectus will also be revamped to help investors more easily find the information they need and to compare different plans.
Click here to read the proposed amendments. The CSA welcome your comments. The comment period is open until June 22, 2010.
A scholarship plan dealer is required to give you a prospectus no later than two days after you sign a contract to open a scholarship plan. Each scholarship plan has different risks, costs and restrictions, which are set out in the plan’s prospectus.
Before you invest, make sure you understand:
The Investor Education Fund also offers information and resources on RESPs.
A scholarship plan is a type of Registered Education Savings Plan (RESP) used by Canadians to help save for a child’s education. These plans have unique features and can be more complex than other types of RESPs. Providing clearer and simpler disclosure should help investors better understand these plans and make more informed investment decisions.
Central to the proposal is a new Plan Summary document that will highlight the potential benefits, risks and costs of investing in a scholarship plan. It must be written in plain language, will generally be no more than three pages and must be delivered with the prospectus. The scholarship plan prospectus will also be revamped to help investors more easily find the information they need and to compare different plans.
Click here to read the proposed amendments. The CSA welcome your comments. The comment period is open until June 22, 2010.
What a prospectus can tell you
A prospectus is a legal document that is required by, and filed with, securities regulators. It provides details about an investment that is offered for sale to the public. A prospectus should contain the facts that an investor needs in order to make an informed investment decision.A scholarship plan dealer is required to give you a prospectus no later than two days after you sign a contract to open a scholarship plan. Each scholarship plan has different risks, costs and restrictions, which are set out in the plan’s prospectus.
Before you invest, make sure you understand:
- which post-secondary programs qualify under the plan
- the fees are you expected to pay and when
- your options for making contributions
- when and how payments will be made from the plan
- what happens if your child does not go on to post-secondary education
- what happens if you want to cancel your plan
- the risks of the investments in the plan
The Investor Education Fund also offers information and resources on RESPs.
