Asset Management Agreement Template for Canada

When you engage a professional investment manager in Canada, you need a comprehensive Asset Management Agreement that protects your interests while ensuring regulatory compliance. This critical legal document establishes the terms under which a registered portfolio manager will handle your investments, defining everything from investment objectives to fee structures and reporting requirements.

When do you need this document?

You require an Asset Management Agreement whenever you delegate investment decision-making authority to a professional money manager. This includes situations where pension funds engage external managers, high-net-worth individuals hire portfolio managers for discretionary account management, or institutional investors outsource asset management functions. The agreement is mandatory for registered portfolio managers operating under National Instrument 31-103 and becomes essential when crossing provincial boundaries, as each province maintains its own Securities Act with specific requirements for investment management relationships.

Key legal considerations

Your agreement must clearly define the scope of the manager's authority, including any investment restrictions or guidelines you wish to impose. Pay particular attention to fee disclosure requirements, which must comply with Canadian securities regulations mandating transparent cost reporting. The document should address liability limitations, indemnification provisions, and termination procedures to protect your interests. Custody arrangements require special attention, as Canadian law demands proper segregation of client assets and may require third-party custodians for certain account types. Risk disclosure obligations are extensive under Canadian law, requiring managers to clearly communicate potential losses and conflicts of interest.

Legal requirements in Canada

Under the Securities Act in each province, asset managers must be registered as portfolio managers or exempt market dealers, depending on their activities and client base. Your agreement must reflect the manager's registration status and comply with National Instrument 31-103 requirements for client relationships. The Proceeds of Crime (Money Laundering) and Terrorist Financing Act requires managers to implement know-your-client procedures and suspicious transaction reporting, which must be addressed in your agreement. Privacy obligations under PIPEDA govern how your personal information is collected, used, and disclosed, requiring specific consent provisions in the contract. Tax reporting requirements under the Income Tax Act may also impact agreement terms, particularly for non-resident clients or complex investment structures. Provincial insurance legislation may require additional disclosures if the manager provides insurance-related investment advice.