On April 16, 2015, the securities regulatory authorities in
British Columbia, New Brunswick and Saskatchewan (the Participating
Jurisdictions) published Multilateral CSA Notice 45-315
Proposed Prospectus Exemption for Certain Distributions through
an Investment Dealer in respect of a proposed prospectus
exemption (the Proposed Exemption).
If adopted, the Proposed Exemption would allow issuers listed on
a Canadian exchange to raise funds by distributing securities to
investors who have obtained advice about the suitability of the
investment from a registered investment dealer, without having to
file a prospectus or other offering document with securities
The securities regulators in the Participating Jurisdictions
noted that since issuers rarely use the prospectus exemptions
intended for sales to retail investors, retail investors have
limited opportunity to invest directly in issuers. As such, retail
investors do not have an opportunity to participate in the more
favourable terms generally offered through private placements.
To rely on the Proposed Exemption, issuers must meet all of the
the issuer must be a reporting issuer in at least one
jurisdiction of Canada and have a class of equity securities listed
on the Toronto Stock Exchange, the TSX Venture Exchange, the
Canadian Securities Exchange or Aequitas Neo Exchange Inc.;
the issuer's continuous disclosure record must be up-to-date
and in compliance with applicable securities legislation;
the offering must consist of (i) a listed security, (ii) a unit
consisting of a listed security and a warrant to acquire a listed
security, or (iii) a security convertible into a listed security at
the holder's option;
the news release announcing the offering must describe the
proposed distribution and use of proceeds and contain a statement
that there is no undisclosed material fact or material change in
respect of the issuer;
the investor must obtain advice regarding the suitability of the
investment from a registered investment dealer (which does not
include a restricted dealer, an exempt market dealer or a dealer
that is exempt from providing suitability advice);
the investor must be provided with a contractual right of action
for rescission or damages in the event of a misrepresentation in
the issuer's continuous disclosure record; and
if an issuer voluntarily provides an offering document, the
investor will have certain rights of action in the event of a
misrepresentation in it.
Securities issued under the Proposed Exemption would be subject
to resale restrictions for four months after issuance and issuers
must file a report of exempt distribution within 10 days after each
Background to Prospectus Exemptions
One of the main requirements of securities legislation is that
an issuer distributing a security must file, and obtain a receipt
for, a prospectus, which must contain full, true and plain
disclosure of all material facts relating to the securities being
offered. Securities legislation provides exemptions from the
prospectus requirement under certain circumstances (e.g.,
because of the investor's knowledge, sophistication or
relationship with principals of the issuer, or where alternate
protections exist). The rationale behind the Proposed Exemption is
that the conditions relating to the Proposed Exemption would
provide alternate protections for investors.
Comments Sought on Proposed Exemption
The securities regulators in the Participating Jurisdictions are
inviting comments on all aspects of the Proposed Exemption and, in
particular, feedback on the following:
whether issuers will use the Proposed Exemption;
whether the Proposed Exemption should be expanded so that
investors could also receive suitability advice from a registered
exempt market dealer;
the appropriateness of a four-month hold period applicable to
securities issued under the Proposed Exemption; and
whether the Proposed Exemption maintains sufficient investor
Time for Comments
Comments will be accepted 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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