On April 16, 2015, the Canadian Securities Administrators
announced that the securities regulatory authorities in British
Columbia, Saskatchewan and New Brunswick are each publishing for
comment a proposed prospectus exemption (the "Proposed
Exemption") that could provide issuers with the
ability to raise capital from retail investors without investing
the time and cost required by currently available exemptions.
Under currently available prospectus exemptions, issuers cannot
easily distribute securities to retail investors who do not qualify
as "accredited investors" or who do not meet the
conditions under the new existing securityholder exemptions. Retail
investors have limited opportunities to invest directly in issuers
and to benefit from the more favourable terms generally offered
through private placements.
The Proposed Exemption would provide issuers with greater access
to retail investors without the need for the significant financial
and time investments currently required, while providing retail
investors with greater investment opportunities and an appropriate
level of protection.
The key conditions to the Proposed Exemption are as follows:
the issuer must be a reporting issuer in at least one
jurisdiction in Canada and must have at least one class of equity
security listed on the Toronto Stock Exchange, the TSX Venture
Exchange, the Canadian Securities Exchange or Aequitas Neo Exchange
the issuer must have filed all timely and periodic disclosure
documents as required under continuous disclosure
the offering can consist only of a listed security, a unit
consisting of a listed security and a warrant to acquire a listed
security, or another security convertible into a listed security at
the security holder's sole discretion;
the issuer must issue and file a news release that (a)
discloses, in reasonable detail, the distribution, the use of
proceeds and any material fact that has not yet been generally
disclosed and (b) includes a statement that there is no material
fact or material change about the issuer that has not been
the investor must obtain advice regarding the suitability of
the investment from a registered investment dealer;
the investor must be provided with a contractual right of
action in the event of a misrepresentation in the issuer's
continuous disclosure record, regardless of whether the investor
relied on the misrepresentation; 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 such offering document contains a
Securities sold under the Proposed Exemption would be subject to
a four-month hold period and issuers will be required to file a
report of exempt distribution within ten days of each
The Proposed Exemption contains a "sunset clause",
providing that the exemption would cease to be available three
years after its implementation. The Canadian Securities
Administrators have indicated that, before making it a permanent
rule, they intend to monitor the use of the Proposed Exemption to
assess its usefulness for issuers, whether retail investors use it
in preference to acquiring securities on the secondary market, and
whether it provides sufficient protections to investors.
The Canadian Securities Administrators are inviting comments on
the Proposed Exemption until June 15, 2015.
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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