The Ontario Securities Commission (OSC) recently launched an 18-month pilot, providing a prospectus exemption (the prospectus exemption) to those Ontario investors with qualifying education or work experience access to increased investment opportunities. The exemption also has the added benefit of giving businesses headquartered in Ontario access to a new source of investment capital.
The prospectus exemption was set out as an interim order under Ontario Instrument 45-507 Self-Certified Investor Prospectus Exemption (Interim Class Order)
In Ontario, most of the capital raised from individuals under prospectus exemptions is raised using the accredited investor exemption. While many investors have investment knowledge gained through education or industry experience, others do not meet this accredited investor criteria. Some investors may not also meet the criteria for other prospectus exemptions, such as the employee prospectus exemption.
To invest through the prospectus exemption, investors must certify that they have met at least one qualifying criteria and review and complete a risk acknowledgment form confirming they understand the risks of investing. Investors will also be subject to a $30,000 annual limit on all purchases and can choose to allocate that amount to one or multiple issuers.
Issuers must report the use of the self-certified prospectus exemption by filing reports of exempt distribution. The OSC will use this data to monitor the use of the prospectus exemption and to inform future policymaking.
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.
