Ontario Securities Commission expands its review of prospectus exemptions

TORONTO – The Ontario Securities Commission (OSC) announced today that it is broadening the scope of its exempt market review as a result of stakeholder feedback. The expanded review will consider whether the OSC should introduce new prospectus exemptions that may assist capital raising for business enterprises, while protecting the interests of investors.

“Given the importance of the exempt market, we are broadening the scope of our review in order to strike the right balance between investor protection and efficient capital raising for businesses in Ontario,” said Howard Wetston, Q.C., Chair and CEO of the OSC.  

As part of its initial review, the OSC invited members of the public to attend four consultation sessions in February 2012, to share their views on whether changes to the $150,000 minimum amount and accredited investor prospectus exemptions were appropriate. The OSC also requested input from certain of its advisory committees and industry stakeholders. In addition, 108 written comment letters were received. 

Based on the feedback, the following themes were determined as meriting further review:  

• Regulatory approach given the diversity of the exempt market segments; and
• Access to the exempt market for both issuers and investors and whether participation should be broadened.

In broadening this review, the OSC recognizes the significance of Ontario’s exempt market to investors and businesses. The total amount of capital raised through exempt distributions reported to the OSC in 2011 was approximately $142.9 billion, 60 per cent of which was raised in Ontario.

As part of the next phase of its review, the OSC will publish a second consultation note, seek further public feedback through additional consultation sessions and consider the experience of other CSA and international jurisdictions. In conducting its broadened review, the OSC will work with staff in other CSA jurisdictions.

The OSC also plans to establish an ad hoc advisory committee, which will inform staff on possible regulatory approaches to the exempt market. Information on the application process will be announced shortly.

OSC Staff Notice 45-707 published today can be found on the OSC’s website at www.osc.ca. The Notice provides further information on the feedback received from the OSC public consultation sessions and written comment letters.

 

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