Canada: OSC Update On Proposed Capital Raising Exemptions

Last Updated: September 12 2013
Article by Brian P. Koscak

On August 28, 2013, the Ontario Securities Commission (OSC) released a progress report on its review of certain prospectus exemptions to facilitate capital raising in Ontario (the Progress Report) as initially set out in OSC Staff Consultation Paper 45-710 Considerations for New Capital Raising Prospectus Exemptions published on December 14, 2012 (the Consultation Paper).

The Progress Report states that after reviewing feedback from a broad range of stakeholders, the OSC has determined to consider further the following capital raising prospectus exemptions:

  • An offering memorandum (OM) exemption (the OM exemption)
  • An equity crowdfunding exemption
  • A family, friends and business associates exemption
  • A streamlined version of the existing rights offering exemption currently available across Canada

OM Exemption

An OM exemption, as set out in Section 2.9 of National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106), is available across Canada except for Ontario. The Progress Report indicates that the OSC will consider adopting the Alberta form of OM exemption which, among other things, limits investments to $10,000 from the public unless the investor is an 'eligible investor'. An eligible investor includes a person whose:

  1. Net assets, alone or with a spouse, in the case of an individual, exceed $400,000
  2. Net income before taxes exceeded $75,000 in each of the two most recent calendar years and who reasonably expects to exceed that income level in the current calendar year

The OSC will also consider whether there is a need for additional measures to be included in any OM exemption to be adopted in Ontario, including:

  1. Whether and how the form of OM could be streamlined so that it is more cost-effective for small and medium-sized enterprises and more user-friendly for investors
  2. Possible limits on the types of securities offered
  3. Appropriate investment limits

Equity Crowdfunding

The Progress Report states that the OSC is still considering adopting a form of equity crowdfunding exemption for Ontario. The OSC seeks to strike the right balance between protecting investors while not imposing excessive regulatory costs on issuers and funding portals. A detailed review of the OSC's proposed equity crowdfunding framework is set out in the Consultation Paper.

The Progress Report provides some commentary on the OSC's rationale for providing exemptive relief from certain registration requirements for MaRS VX, a not-for-profit entity that seeks to provide a matching service between accredited investors and social impact issuers through its on line funding portal. See Cassels Brock e-LERT titled OSC Approves Ontario Only Equity Crowdfunding Portal for Accredited Investors – MaRS VX dated August 13, 2013. The Progress Report notes that the MaRS VX decision was highly fact specific and that the OSC continues to review the registration issues relating to funding portals. As a result, the MaRS VX decision should not be seen as a precedent.

Family, Friends and Business Associates Exemption

The private issuer exemption under Section 2.4 of NI 45-106 permits raising capital from certain enumerated categories of investors, including close personal friends, close business associates and certain family members of a director, executive officer, founder or control person of an issuer. The Progress Report indicates that the OSC will consider adopting a broader family, friends and business associates exemption with the goal of harmonization across Canada. Currently, Ontario is the only jurisdiction in Canada that does not have a form of family, friends and business associates exemption in Canada as a stand-alone exemption.

Rights Offering Exemption

In response to feedback from small and medium-sized enterprises, the OSC will also consider revisions to the existing rights offering exemption contained in section 2.1 of NI 45-106 and National Instrument 45-101 Rights Offerings. These revisions may include reducing the current regulatory review period from 10 days to three business days, reducing the exercise period for rights to 10 business days, and improving the ability of issuers to communicate with shareholders through electronic delivery of documents. The OSC will also consider whether the existing anti-dilution provision which limits the number of securities an entity can issue under the exemption to 25% of the entities outstanding securities should also be relaxed.

Other Highlights

The Progress Report provides a summary of comments on the Consultation Paper (Appendix A), an investor survey report (Appendix B) and the OSC's findings from its research involving small and medium-sized enterprises (Appendix C).

The Progress Report notes that the OSC will not be considering the following prospectus exemptions or amendments that it discussed in its Concept Proposal: (a) the investor sophistication exemption; (b) the registrant advice exemption; (c) changes to the existing private issuer exemption; and (d) the re-introduction of the closely-held issuer exemption.

The OSC does not indicate when it will provide its next report or proposed draft prospectus exemptions, if any (i.e., the OSC may do nothing), other than stating that any new or amended prospectus exemptions must be undertaken as part of the OSC rule making process, as set out in the Securities Act (Ontario) which includes at least a 90 day comment period, additional time for the publication of any final rules or amendments and Ministerial approval. Accordingly, if anything is done, it will be in 2014 at the earliest.

A copy of the Progress Report is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions