Canadian securities regulatory authorities in all jurisdictions
but Ontario and Newfoundland and Labrador today published for comment a draft prospectus
exemption that would allow issuers listed on the TSX Venture
Exchange to distribute securities to existing security holders.
According to the CSA, the time and cost involved in preparing
the required offering documents are currently preventing
TSX-V issuers from conducting prospectus offerings or using
prospectus exemptions to offer securities to retail investors.
Thus, under the proposal a new prospectus exemption would
be available to TSX-V issuers if certain conditions are met,
including that: (i) the issuer has a class of equity
securities listed on the TSX-V; (ii) the issuer has filed
all required timely and periodic disclosure documents;
(iii) the offering consists only of the class of equity
securities listed on the TSX-V or units consisting of the listed
security and a warrant to acquire the listed security; (iv) the
issuer issues a news release disclosing the proposed offering,
including details of the use of proceeds; and (v) each investor
confirms in writing to the issuer that, as at the record date, the
investor held the type of listed security that the investor is
acquiring under the exemption.
Investors would be limited to investing no more than $15,000 per
year under the exemption unless suitability advice from a
registered investment dealer is obtained. Further, investors
would be provided with certain rights of action in the event of a
misrepresentation in an issuer's continuous disclosure record
or, if the issuer voluntarily provides one, an offering
document. Securities issued under the proposed exemption would be
subject to resale restrictions. In order to reinforce the goal of
statutory insider trading prohibitions, the proposal requires that
issuers represent to prospective purchasers in the subscription
agreement that there are no material facts or material changes
relating to the issuer that have not been generally disclosed.
The participating jurisdictions are accepting comments on the
proposal until January 20, 2014. If implemented, the exemption
would expire in some of the jurisdictions at the end of 2015,
although the use of the exemption would be assessed for usefulness
with the potential for extension. For more information, see Multilateral CSA Notice 45-312.
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In Ontario Securities Commission v. Tiffin, the Ontario Court of Justice clarified the limits of the definition of "securities" under s.1(1) of the Securities Act, as it relates to promissory notes. The defendant in the case was charged with trading in securities without being registered and while prohibited, and without filing a prospectus.
The OSC has issued a press release advising stakeholders that Ontario securities law may apply to any use of distributed ledger technologies, such as blockchain, as part of financial products or service offerings.
The use of electronic signatures is becoming increasingly commonplace in commercial transactions, as individuals and businesses capitalize on the administrative efficiency afforded by today’s digital world.
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