On November 27, 2014, the Ontario Securities Commission
("OSC") published its Notice of
Amendments to OSC Rule 45-501 Ontario Prospectus and
Registration Exemptions approving a new prospectus exemption
(the "Exemption") expected to come into
force, provided Ministerial approval is obtained, on February 11,
2015. The Exemption will allow issuers listed on the Toronto Stock
Exchange, the TSX Venture Exchange, the Canadian Stock Exchange and
the Aequitas Neo Exchange to raise capital from existing security
holders without a prospectus, subject to certain conditions being
met. The Exemption will bring Ontario in line with other Canadian
jurisdictions (other than Newfoundland and Labrador) who adopted a
similar exemption in March 2014. For more information on the
existing exemption, please refer to our
Spring 2014 Securities Practice Notes.
Pursuant to the Exemption, an issuer may offer a class of listed
securities (or units which include a listed security and warrant to
acquire the listed security) to all existing security holders of
the class of security being offered. The OSC has imposed a limit on
issuers from making a distribution under the Exemption that will
result in more than 100% dilution of the issuer's already
outstanding securities of the same class of security being offered.
This limit is unique to Ontario and has not been imposed by the
other CSA jurisdictions. Another unique feature of the Exemption
(which differs from the other CSA jurisdictions) is that it is not
available to investment funds.
In order to rely on the Exemption, an issuer must announce the
distribution by news release and provide relevant details about the
distribution including the minimum and maximum number of securities
being offered, expected proceeds and use of the proceeds. All
materials related to a distribution must be filed by the issuer on
SEDAR on the same day the issuer provides materials to investors.
Like many other exempt market distributions, the securities will be
subject to statutory 4-month hold period imposed by National
Instrument 45-102 Resale of Securities.
Under the Exemption, investors will be limited to investments in
the aggregate of $15,000 (when added to the acquisition cost to the
investor of all other securities of the issuer acquired in reliance
on the Exemption) for every 12 month period unless they seek
suitability advice regarding the investment from a registered
The Exemption is part of the OSC's larger exempt market
review which includes proposals for additional capital raising
exemptions in Ontario. Stay tuned for future updates in future
editions of the Securities Practice Notes newsletter.
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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