British Columbia Securities Commission

British Columbia Securities Commission

November 21, 2013 12:00 ET

British Columbia Securities Commission: Canadian Securities Regulators Propose New Exemption for Distributions to Existing Security Holders

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 21, 2013) - The securities regulatory authorities in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Yukon, Northwest Territories, Nunavut, and Prince Edward Island today published for comment a proposed prospectus exemption that would, subject to certain conditions, allow issuers listed on the TSX Venture Exchange (TSX-V) to raise money by distributing securities to their existing security holders.

Currently, if a TSX-V issuer wants to distribute securities to its existing security holders who are not accredited investors, they must use a prospectus or a prospectus exemption that requires a disclosure document, such as an offering memorandum or a rights offering circular.

Data shows that TSX-V issuers rarely use prospectus offerings or prospectus exemptions that require disclosure documents. This means that retail security holders who want to make an additional investment in a TSX-V issuer must generally buy securities on the secondary market at the market price and pay brokerage fees. This also means that the TSX-V issuers do not have access to a potential source of capital.

"The proposed exemption would allow TSX-V issuers to distribute securities to existing security holders, relying on their continuous disclosure record, thereby reducing the cost for investors and providing issuers with access to an additional source of financing," said Bill Rice, Chair of the CSA and Chair and Chief Executive Officer of the Alberta Securities Commission.

In order to acquire securities under this exemption, an existing security holder would have to confirm in writing that they were a security holder as of the record date for the offering. This limits use of the exemption to investors that have already made an investment decision in the
issuer. Other key conditions designed for investor protection include:

  • unless the investor has obtained advice regarding the suitability of the investment from a registered investment dealer, the aggregate amount invested by the investor in the last 12 months under the exemption must not be more than $15,000, and
  • the investor must be provided with rights of action in the event of a misrepresentation in the issuer's continuous disclosure record.

All participating CSA jurisdictions are inviting comments until January 20, 2014.

A copy of the CSA notice and proposed exemption is available on participating CSA member websites.

The CSA, the council of the securities regulators of Canada's provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

Contact Information

  • British Columbia Securities Commission
    Richard Gilhooley

    Alberta Securities Commission
    Mark Dickey

    Autorite des marches financiers
    Sylvain Theberge

    Financial and Consumer Services Commission, New Brunswick
    Wendy Connors-Beckett

    Manitoba Securities Commission
    Kevan Hannah

    PEI Securities Office
    Janice Callbeck
    Office of the Attorney General

    Nova Scotia Securities Commission
    Tanya Wiltshire

    Office of the Yukon Superintendent of Securities
    Rhonda Horte

    Nunavut Securities Office
    Louis Arki

    Northwest Territories Securities Office
    Donn MacDougall

    Financial and Consumer Affairs Authority of Saskatchewan
    Daniela Machuca