On November 21, 2013, Canadian securities regulators in all jurisdictions but Ontario and Newfoundland and Labrador published for comment a proposed prospectus exemption for issuers listed on the TSX Venture Exchange (TSXV issuers) that would, subject to certain conditions, allow them to obtain additional financing by distributing securities to their existing security holders.
TSXV issuers generally do not use prospectus offerings or prospectus exemptions to sell to retail investors due to the costs involved in preparing the required offering document and instead typically raise funds through offerings to "accredited investors". As a result, when acquiring securities of TSXV issuers, retail investors are often required to purchase the shares on the TSXV and pay associated brokerage fees, without receiving any "sweetener" such as warrants or a discount to the market price typically available in private placements to "accredited investors". The proposed exemptions would increase the opportunity for retail investors to participate in offerings by TSXV issuers and lower the cost of such offerings.
The proposed exemption will not require a TSXV issuer to provide additional continuous disclosure, such as an annual information form, to take advantage of the proposed exemption.
Securities distributed under the proposed exemption would have to meet certain conditions, including:
The first trade of a security acquired under the proposed exemption will be subject to a four-month restricted period.
The comment period for the proposed exemption closes on January 20, 2014. Bennett Jones is able to assist clients in submitting their comments on the proposed exemption. Please contact us if you would like further information or if you would like us to submit a comment on your behalf.