Firms, independent partnerships and independent representatives often wish to share the remuneration to which they are entitled for the sale of a product or the provision of a financial service. To do so, they must refer to the rules governing commission sharing.

Commission sharing is allowed only between persons who are authorized under An Act respecting the distribution of financial products and services  This link will open in a new window. This Act does not require that there be a reason to share a commission. However, for tax purposes, the sharing of commissions should be done between authorized persons who participated in the sale of a product or the provision of a financial service.

Sharing of commissions takes place when a registrant (a firm, an independent partnership or an independent representative) splits the remuneration and gives part of it to another person authorized under the Act. Commission sharing therefore always takes place after the remuneration has been paid.

Two registrants may sell a product or provide a service jointly to a client. They are both responsible for the services they provided to this client. Consequently, both are entitled to receive a commission. In such a case, this is not commission sharing.

On the other hand, commission sharing takes place when a product is sold or a service provided by only one registrant, who assumes responsibility toward the client, and another registrant receives part of the remuneration for the transaction and agrees to share it.

Rules Applicable to Commission Sharing

These rules vary according to the way in which the person who is entitled to remuneration carries on business and whether the person agrees to share such remuneration.

Rules on commission sharing applicable to independent representatives

An independent representative Section 143 under An Act respecting the distribution of financial products and services This link will open in a new window (R.S.Q., c. D-9.2) may share his commission only with:

  • Another independent representative;
  • An independent partnership;
  • A firm, with the exception of a deposit institution;
  • A real estate or mortgage broker governed by the Real Estate Brokerage Act  (R.S.Q., c. C-73.2)

Rules on commission sharing applicable to firms

A firm Section 100 under An Act respecting the distribution of financial products and services This link will open in a new window (R.S.Q., c. D-9.2) may share its commission only with:

Rules on commission sharing applicable to independent partnerships

An independent partnership Section 143 under An Act respecting the distribution of financial products and services This link will open in a new window (R.S.Q., c. D-9.2) may share its commission only with:

Commission sharing with financial planners who are members of a professional order

The Autorité des marchés financiers (the "AMF") considers it acceptable for registrants to share their commissions with a financial planner who is a member of a professional order that has entered into an agreement with the AMF. A financial planner could therefore be paid for certain activities (such as client referrals), provided that his professional order allows the financial planner to receive money derived from such commission sharing.

Can a representative attached to a firm or an independent partnership share a commission?

A representative is not entitled to receive a commission directly without doing so through his firm or partnership. Neither can he share a commission directly without doing so through the firm or the partnership on behalf of which he pursues his activities.

Commission sharing applies both to remittances to a third party and to receipt by a third party of part of a commission.

Where a representative wishes to remit part of his commission to another representative or a registrant, he must do so through his firm or partnership. His firm or partnership sends part of the commission to the registrant concerned, and the latter must pay the amount owing to the representative, where applicable.

Payment of commission at the same time as the commission is shared

To simplify administrative operations in certain cases, a registrant may ask that his commission be paid in part to another person (a third party) based on an agreement concerning the sharing of commissions.

To comply with An Act respecting the distribution of financial products and services This link will open in a new window, this administrative shortcut must meet the following minimum conditions:

  • The registrant must submit to the payer of the commission (in most
  • cases, an insurer) a written request to that effect. This constitutes evidence that a request has been made for payment to a third party.
  • The third party must be authorized to share a commission.
  • The registrant must indicate in the commissions register all the information required under the Regulation respecting firms, independent representatives and independent partnerships This link will open in a new window (c. D-9.2, r.2). He must therefore enter in the register all the information required under section 22 regarding all the amounts to which he was entitled for the products sold and services provided and all the information required under section 23 concerning the sharing of commissions.

Commission payment linked to payments other than shared commissions

In certain cases, a registrant may ask for his commission to be paid in part to another person who is not a representative (a third party), either because he owes that person money or wishes to give him money by way of a gift.

The rules set up for the payment of commissions and those pertaining to commission sharing must be followed. Consequently, any such payment to a third party must not take place by way of commission sharing in disguise.

To comply with An Act respecting the distribution of financial products and services This link will open in a new window, this invoice payment procedure must meet the following minimum conditions:

  • The registrant must submit to the payer of the commission (in most cases, an insurer) a written request to that effect. This constitutes evidence that a request has been made for payment to a third party.
  • The registrant must keep the evidence in support of the expense or gift that he requested a third party to pay on his behalf. The registrant must be able to prove the accuracy, origin, allocation and genuineness of the expense or gift. In case of doubt, the AMF may determine that this commission sharing is not authorized by law.
  • The registrant must indicate in the commissions register all the information required under the Regulation respecting firms, independent representatives and independent partnerships (c. D-9.2, r. 9). He must therefore enter in the register all the information required under section 22 regarding all the amounts to which he was entitled for the products sold and services provided. The registrant must not take into account only what he has actually received, given the invoice payment procedure that he asked the payer to carry out.

Because of the administrative details required for evidence in support of the expense or gift, this procedure is not recommended. It may at best meet certain specific or ad hoc needs.