TORONTO, Nov. 27, 2014 /CNW/ - The Ontario Securities
Commission (OSC) today published an existing security holder
prospectus exemption for reporting issuers listed on the Toronto
Stock Exchange, TSX Venture Exchange, Canadian Securities Exchange
or Aequitas NEO Exchange (upon the effective date of its
recognition order). The exemption is the first of several new
exemptions to facilitate capital raising by businesses at different
stages in their development, while maintaining an appropriate level
of investor protection. Subject to Ministerial approval, the
exemption will come into effect on February
11, 2015.
The exemption balances interests of issuers and investors. Once
in effect, the exemption will allow listed reporting issuers
(excluding investment funds) to raise capital from existing
security holders on a cost effective basis. The exemption will also
enable existing retail security holders to acquire securities of
the issuer directly, rather than through the secondary market.
The exemption also includes a number of investor protection
measures, including that issuers relying on the exemption must make
the offer to all existing security holders as of the record date
and investors will be subject to investment limits unless they
obtain advice regarding the suitability of the investment. Further,
issuers will be subject to liability for, among other things, a
misrepresentation in their disclosure record.
A similar exemption has been adopted in other Canadian
jurisdictions.
"The exempt market is a crucial source of capital for growing
companies, and it is critical that it is globally competitive and
that investors can participate in the market with confidence," said
Howard Wetston, OSC Chair and Chief Executive Officer. "This new
prospectus exemption is the first of several exemptions we are
considering, which are expected to help streamline capital raising
for businesses in the exempt market."
The exemption represents one of four new, potential capital
raising tools, which were published for comment by the OSC in
March 2014. Three exemptions – a
family, friends and business associates prospectus exemption; an
offering memorandum prospectus exemption; and a crowdfunding
prospectus exemption together with a registration regime for online
funding portals – remain under consideration.
The comment period for these exemptions closed in June 2014. The OSC received approximately 815
comment letters and is considering the feedback received from
stakeholders. This work is a priority for the OSC. The OSC's
objective is to publish these three exemptions in final form or, if
necessary, for a second comment period as soon as reasonably
practicable in the new year.
The OSC is the regulatory body responsible for overseeing
Ontario's capital markets. The OSC
administers and enforces Ontario's
securities and commodity futures laws. Its mandate is to provide
protection to investors from unfair, improper or fraudulent
practices and to foster fair and efficient capital markets and
confidence in capital markets.
The objective of the exempt market reform initiative is to
facilitate capital raising for start-ups and small and medium-sized
enterprises and to modernize Ontario's exempt market regulatory regime,
while adequately protecting investors.
SOURCE Ontario Securities Commission