On March 20, 2014, the Alberta Securities Commission (the
ASC) published statistics about the use of the
offering memorandum exemption in s. 2.9 of National Instrument
45-106 Prospectus and Registration Exemptions (theOM Exemption) for the Province of
Unfortunately, there is no national database where all this
information exists for each Canadian jurisdiction. Not every
Canadian jurisdiction publishes data on the use of the OM
Exemption. Regardless, the 13 key statistics below are taken
directly from Annex B Background – Local Experience
with OM Exemption from Multilateral CSA Notice of
Publication and Request for Comment Proposed Amendments
to National Instrument 45-106 Prospectus and Registration
Exemptions Relating to the Offering Memorandum Exemption and in
Alberta, New Brunswick and Saskatchewan, Reports of Exempt
I did not prepare this data but found it important enough to
include in this blog since many capital market participants often
seek data on the use of the OM Exemption. This provides useful
data, albeit Alberta-only data.
The following summarizes some of the observations by ASC staff
on use of the OM Exemption in Alberta.
1. "The OM Exemption is the second most frequently used
"capital-raising" prospectus exemption in Alberta (41% of
distributions in 2012 were made under the OM Exemption) although
the value of the securities distributed ($0.5 billion in 2012) was
3.8% of the total.
2. The exemption is used almost exclusively by non-reporting
3. 77% of the 287 issuers raising money in Alberta in 2011
and 2012 under the OM Exemption were Alberta-based.
4. In 2011 and 2012, there was approximately $824 million
raised by 223 Alberta-based issuers under the OM Exemption.
Approximately 155 or 70% of issuers self-reported their industry
category as real estate or mortgage-investment corporations (MIC).
These real estate and MIC issuers raised 76% of the total amounts
raised by Alberta-based issuers under the OM Exemption.
5. Of the purchasers under the OM Exemption in 2011 and
90.5% were individuals;
5.9% were corporations;
1.7% were limited partnerships; and
1.6% were trusts.
6. Approximately 61% of the individual investors made
at least one purchase in an amount greater than $10,000,
suggesting, assuming compliance, that they qualified as
"eligible investors". These purchases represented
approximately 90% of the total value of purchases by
7. Approximately 39% of the individual investors purchased
in amounts not exceeding $10,000. These individuals may or may not
be eligible investors.
8. The average size of an investment by an individual
investor (assumed to be an "eligible investor" because of
an investment of more than $10,000) in 2011 and 2012 was
approximately $45,700 and $47,900 respectively, while the median
was approximately $26,200 and $27,500 respectively. (These amounts
were higher for non-individuals.) Approximately 24% of eligible
investors purchased more than $50,000 and approximately 8%
purchased more than $100,000 per year. The following is a further
breakdown of the total number of individuals that invested in 2011
or 2012 $50,000 or more in a single year under the OM
1773 individuals invested between $50,000 and
816 individuals invested between $100,000 and
122 individuals invested between $250,000 and $499,999;
26 individuals invested in excess of $500,000.
9. The ASC has received numerous complaints from investors
that have invested significant amounts under the OM Exemption and
incurred significant losses.
10. While approximately 68.7% of individuals made only a
single investment over 2011 to 2012, the following % of individuals
made multiple purchases:
20% made 2;
5.6% made 3; and
5.8% made 4 or more.
11. Where individuals made multiple purchases, their average
and median investment, not surprisingly, increased as
12. Of investors who only invested in amounts of less than
$10,000 (and may be non-eligible investors) 10% in 2011 and 17% in
2012 made repeat purchases resulting in their total investment
exceeding $10,000. Typically the total investment was less than
$25,000 but approximately 111 investors who invested less than
$10,000 per distribution invested in total from $25,000 to $100,000
within a calendar year.
13. There are a few issuer groups raising the majority of
the funds under the OM Exemption in Alberta. Some of these large
issuers have "in-house" exempt market dealers selling the
securities on their behalf."
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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