OSC Publishes Report On Exempt Market Exercise
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The Ontario Securities Fee (OSC) not too long ago printed OSC Staff Notice 45-717 – Ontario’s Exempt
Market: A review of capital raised in Ontario through prospectus
exemptions since 2017 (the
“Report“). The Report summarizes personal
or “exempt market” exercise in Ontario by non-investment
fund issuers between 2017 and 2019, and using a variety of new
prospectus exemptions throughout that interval. The Report is proscribed to
data required to be reported to the OSC, and subsequently does
not present a whole image of all exempt market exercise.
Total, the Report notes a marginal decline within the quantity of
capital raised in Ontario’s exempt market in annually lined
by the Report, though the variety of issuers remained comparatively
steady and investor participation – significantly amongst
people – elevated significantly over that interval.
The Report highlights the important thing drivers of Ontario’s exempt
market since 2019, together with the sorts of issuers that raised
capital and the traders they raised it from. Highlights of the
- Whereas Ontario’s exempt market is comprised of a various set
of members, general a small variety of institutional traders
and overseas issuers account for a disproportionately massive share of
- The variety of particular person traders accessing the exempt market
has grown yr over yr from 2017 to 2019. In 2019, roughly
20,700 people invested in issuers within the finance, actual property
and mortgage sectors (collectively known as
“monetary issuers“), up 12% from 2018
and 54% from 2017.
- Since 2017, reliance on the exempt market by Ontario-based
non-financial issuers declined (each when it comes to gross proceeds
raised and variety of issuer members). Nonetheless, exempt market
exercise from monetary issuers elevated.
- 17% of gross proceeds in 2019 have been raised by public corporations
(together with overseas corporations which are Canadian reporting issuers),
with 56% of these corporations being mining issuers.
- The accredited investor exemption accounts for considerably
all capital raised in Ontario’s exempt market, with 9 out of 10
issuers counting on it to boost 95% of gross proceeds in 2019.
Newer Prospectus Exemptions
Canadian securities regulators adopted a variety of new
prospectus exemptions lately, together with:
- the providing memorandum exemption, which permits corporations to
elevate funds from a broad vary of traders utilizing a simplified
providing doc and extra restricted ongoing reporting necessities
than these relevant to public corporations in Ontario;
- a “household, pals and enterprise associates”
exemption, which permits corporations to boost capital from specified
principals of the issuer, specified relations, shut private
pals and shut enterprise associates;
- an “present safety holder” exemption, which permits
public corporations listed on specified exchanges to boost funds from
present safety holders; and
- a crowdfunding exemption, which permits Canadian corporations to
elevate capital from the general public via a single on-line funding
portal registered with securities regulators.
The Report supplies an replace with respect to the reliance on
these newer prospectus exemptions, together with:
- Between 2017 and 2019, over 1,300 issuers relied upon the
providing memorandum, household, pals and enterprise associates and
present securities holder exemptions, elevating over $1
- The providing memorandum exemption was the second most
steadily used prospectus exemption by particular person traders in
2019 (after the accredited investor exemption). There was an
enhance within the variety of people counting on each the
accredited investor and providing memorandum exemption since
- Since coming into impact, there was no reported use of the
crowdfunding exemption. The CSA proposed new guidelines meant to
enhance harmonization of the regulatory framework for crowdfunding
and create a streamlined system to permit start-ups and different small
companies to boost cash.
For extra data on the Report or to debate prospectus
exemptions which may be out there to your group, please
contact any member of our
Corporate Finance and Securities Group.
The content material of this text doesn’t represent authorized recommendation
and shouldn’t be relied on in that approach. Particular recommendation must be
sought about your particular circumstances.
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