According to the notice, market participants report that issuers
listed on the TSX Venture Exchange (the "TSXV") are not
conducting prospectus offerings or using prospectus exemptions to
sell to retail investors because of the time and cost involved in
preparing the required offering document. This means that retail
investors that want to invest in these issuers must generally buy
their securities on the secondary market. This prejudices the
retail investors by not allowing them to partake in the private
placement, with such benefits as pricing at a discount to market or
warrants, and the issuer by not having access to a potential source
As such, the CSA proposed a new exemption with the following
the issuer must have a class of equity securities listed on the
the issuer must have filed all timely and periodic disclosure
documents as required under applicable securities laws;
the offering can consist only of the class of equity securities
listed on the TSXV or units consisting of the listed security and a
warrant to acquire the listed security;
the issuer must issue a news release disclosing the proposed
offering, including details of the use of proceeds;
each investor must confirm 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 proposed
unless the investor has obtained advice regarding the
suitability of the investment from a registered investment dealer,
the aggregate amount invested by the investor in the last 12 months
under the proposed exemption is not more than $15,000;
an investor must be provided with certain rights of action in
the event of a misrepresentation in the issuer's continuous
disclosure record; and
although an offering document is not required, if an issuer
voluntarily provides one, an investor will have certain rights of
action in the event of a misrepresentation in it.
The CSA is still unsure of how to determine the record date but
it would be sometime before the announcement of the financing (i.e.
an investor could not qualify for the offering by purchasing shares
of the issuer on the TSXV after the private placement is
The notice concludes by inviting comments from market
participants in general and it poses some specific questions,
including whether the proposed exemption should be available to
issuers listed on other Canadian markets, such as the CNSX. The CSA
is inviting comments until January 20, 2014, so the notice will not
assist issuers who immediately need capital. Also, the CSA may
decide to alter or abandon the proposed exemption based on the
feedback it receives.
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.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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