On August 29, 2013 the Ontario Securities Commission (“OSC”) published a notice which indicated that they are considering the following new or expanded exemptions from the prospectus requirements:
1. Crowdfunding exemption
Crowdfunding is a term used to describe a method of raising small amounts of money from many people over the internet through a website known as a portal The OSC is developing a crowdfunding framework for Ontario. To protect investors we plan to limit how much they can invest at one time and during a year through crowdfunding. A company would be limited to raising $1.5 million through a registered portal. Investors would be limited to an investment of $2,500 in a single investment and $10,000 annually.
2. Family, friends and business associates exemption
Other provinces in Canada have a family, friends and business associates exemption and Ontario is considering extending that exemption to the Ontario markets. Under the exemption, family members, close personal friends or close business associates of the directors, executive officers or control persons of the company or its affiliates would be able to invest without a prospectus.
3. Offering memorandum exemption
An offering memorandum (OM) exemption is available everywhere in Canada except Ontario. This would allow a company to sell its shares without a prospectus if it provided an OM to the investor. The OSC intends to develop a proposal for an OM exemption that is based on the OM exemption currently available in Alberta. The OSC is considering limitingthe size of investment if not a public company.
4. Streamlined rights offering exemption
The OSC is working with the securities regulators in the other provinces to see if the existing rights offering exemption available across Canada can be streamlined to improve its efficiency and effectiveness for public companies without compromising investor protections. These changes would include shorter review and exercise periods; dilution exceeding 25% and electronic delivery of documents to shareholders.
