Introduction
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 #23– New Accredited Investor (AI) Category for Investment Professionals
The Report refers to the current definition of AI in National Instrument 45-106 Prospectus Exemptions (NI 45-106) that includes individuals who meet specific income and net financial asset thresholds and recommends that the AI categories should be expanded to encompass investors who have the proficiency to understand the potential risks of investments.
The Taskforce recommended that the AI definition be expanded to include those individuals who have completed and passed relevant proficiency requirements, such as:
- the Canadian Securities Course Exam (in conjunction with another proficiency exam);
- the Exempt Market Products Exam;
- the CFA Charter; or
- the Series 7 Exam and the New Entrants Course Exam (as defined in National Instrument 31-103 Registration Requirements Exemptions and Ongoing Registrant Regulations (NI 31-103)).
In the view of the Taskforce, if an individual meets the requisite proficiency standard to recommend investment products to other investors, that individual should be capable of making similar investment decisions for themselves.
For a full copy of the Report: https://files.ontario.ca/books/mof-capital-markets-modernization-taskforce-final-report-en-2021-01-22-v2.pdf
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.
