British Columbia, Alberta, Saskatchewan, Manitoba and New
Brunswick are each adopting a prospectus exemption that, subject to
certain conditions, allows issuers listed on a Canadian exchange to
raise money by distributing securities to investors who have
obtained advice about the suitability of the investment from an
The exemption permits listed issuers to issue listed securities
to an investor that has obtained advice about the suitability of
the investment from an investment dealer, subject to a number of
conditions. The key conditions are:
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
the issuer must have filed all timely
and periodic disclosure documents as required under the continuous
disclosure requirements in our securities legislation;
the offering can consist only of a
listed security, a unit consisting of a listed security and a
warrant to acquire another listed security, or another security
convertible into a listed security at the security holder's
the news release announcing the
disclose, in reasonable detail, the
distribution, including use of proceeds, and any material fact not
yet generally disclosed, and
include 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 an investment
in British Columbia, Saskatchewan,
Manitoba and New Brunswick, 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. In Alberta,
purchasers are already afforded a statutory right of action;
although an offering document is not
required, if an issuer voluntarily provides one, an investor will
have certain rights of action in the event of a misrepresentation
The first trade of securities issued under the exemption will be
subject to resale restrictions under Section 2.5 of National
Instrument 45 102 Resale of Securities like most other
capital raising prospectus exemptions. In addition, issuers will
have to file a report of exempt distribution within 10 days after
each distribution under the exemption.
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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