Development of the private placement exemptions continues, as
the Canadian Securities Administrators (CSA) have finalized
amendments to National Instrument 45-106 Prospectus
Exemptions (the "Amendments")
relating to the offering memorandum exemption (the "OM
Exemption"). The Amendments had initially been
proposed in March of 2014 (see our April 1, 2014 Update, Four
New Private Placement Exemptions Proposed), and introduce the
OM Exemption into Ontario for the first time for issuers other than
The OM Exemption is intended to allow issuers to access capital
from a wider range of investors than are accessible under other
prospectus exemptions, without incurring the cost of filing a
prospectus. Issuers distributing under the OM Exemption must
provide investors with an offering memorandum that includes
prescribed disclosure that is less comprehensive than what is
required in a prospectus. Because distributions under the OM
Exemption are exempt from the prospectus requirements, securities
distributed under an offering memorandum are not freely tradeable.
The OM Exemption includes the following requirements:
non-reporting issuers must provide
audited financial statements, an annual notice on how the proceeds
raised under the OM Exemption have been used and notice of a
discontinuation of the business, a change in industry or a change
of control of the issuer;
marketing materials used in
distributions under the OM Exemption must be incorporated by
reference into the offering memorandum; and
individual investors are subject to
investment limits of $30,000 for eligible investors (who meet
certain income or asset thresholds) and $10,000 for non-eligible
investors over any given twelve-month period.
Subject to ministerial approval, the Amendments will come into
force in Ontario on January 13, 2016 and in other participating
jurisdictions on April 30, 2016.
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific advice should be
sought about your specific circumstances.
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