On January 22, 2021, the Capital Markets Modernization Taskforce (Taskforce) released its final report (Report). The Taskforce  was established by the Ontario Provincial Government to help transform the regulatory landscape for the capital markets sector, and advise the Minister of Finance on how to improve the innovation and competitiveness of the Province’s capital markets and best help build Ontario’s economy.

The Report includes 74 policy recommendations designed to amend securities laws in the following areas:

  • improving regulatory structure to enhance governance
  • improving competitiveness through regulatory measures
  • ensuring a level playing field between large and small market players
  • improving the proxy system, corporate governance and the process of mergers and acquisitions
  • fostering innovation
  • modernizing enforcement and enhancing investor protection

Because of the far reaching nature of the numerous recommendations, BAX will do a series of articles over the next few weeks on recommendations of interest to small and midcap issuers and the registrants that service them. 

Recommendation #29 –  Changes to Offering Memorandum Exemption

The Task Force reported that, after the accredited investor prospectus exemption, the Offering Memorandum (OM) prospectus exemption is the second most relied upon prospectus exemption for individual investors. Notwithstanding this trend, according to the Taskforce, the OM exemption is under-utilized and has recommended changes to the exemption to widen the investor base.

The OM prospectus exemption in section 2.9 of National Instrument 45-106 Prospectus Exemptions (NI 45-106) has a $100,000 investment limit and amendments would provide that the re-investment of proceeds from disposition through the OM prospectus exemption to not be counted toward the 12-month preceding $100,000 investment limitation. This recommendation would apply to an eligible investor who is an individual having received advice from a portfolio manager, investment dealer or exempt market dealer, and meets suitability requirements.

For a full copy of the Report:

For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.

This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.