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Canada: The Canadian Securities Administrators (CSA) Have Published CSA Notice 45-310 Update On CSA Staff Consultation Note 45-401 Review Of Minimum Amount And Accredited Investor Exemptions
On November 10, 2011, CSA staff published CSA Staff Consultation
Note 45-401 Review of Minimum Amount and Accredited Investor
Exemptions (the consultation note). The consultation note
provided information about the two exemptions under review and set
out 31 consultation questions. The comment period closed on
February 29, 2012.
On June 7, 2012 CSA staff published CSA Staff Notice 45-310
which updates market participants on the status of the
consultation.
With respect to the Accredited Investor Exemption, some
commenters supported retaining the accredited investor exemption
and the definition of accredited investor in its current form while
others suggested that the CSA could broaden the exemption to
increase access to capital by businesses and opportunities to
invest in the exempt market for more people.
With respect to the minimum amount exemption, many stated that
the minimum amount is a flawed basis to measure investor
sophistication or ability to withstand loss and operates to
discourage diversification or appropriate investment strategies.
Many recommended that the CSA repeal the exemption because of these
concerns. Others recommended that the CSA keep the exemption at its
current threshold despite these concerns. Their reasons for keeping
the minimum amount exemption included: its usefulness as an
alternative exemption when no other is available; its simplicity
where investors are not willing to complete paperwork; and, the
reasonable assumption that an investor would exercise care and
caution before making such a large investment
Given the number of comments and the diversity of the feedback
provided, the CSA indicated they would need further time to
complete their review and consider the feedback. The CSA have
indicated that they will finalize their review and publicly report
on their conclusions later this year. A copy of the notice can be
found
here.
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