Reforms to the regulations governing how enterprises raise capital contributed to a tripling of investments, concludes an Ontario Securities Commission report.

By focussing investment eligibility on the investors’ means rather than on a minimum threshold value for transactions, Ontario saw a jump of thousands more investments in 2002 over the previous year, pumping an additional $15 billion into enterprises in Ontario.

“In a year where the overall capital market contracted, especially regarding new issues in high-risk areas, investments in prospectus-exempt firms in Ontario jumped from levels seen in the boom years of the late 1990s,” said OSC Chair David Brown. The report concluded that transactions grew from an annual average of 1,287 transactions from 1995 to 1998, with an annual average value of $6.2 billion, to 3,528 transactions worth $21 billion in an 11-month period in 2001-2002. “Our policy change unlocked a significant pool of capital and directed it to businesses in need of new funding sources,” said Brown.

A separate OSC-commissioned study showed that of the total financings, $2.6 billion went to small and medium enterprises in 2002, generating 16,500 jobs in 2002, and forecast to generate a further 19,400 new jobs in 2003 when the lagged impact on employment gains traction. As well, the report suggests an increase of 0.56% in Ontario’s GDP for 2002, and a further 0.5% GDP growth for 2003. “These investments allow small and medium firms in Ontario to prosper, create jobs and fuel economic growth for the province,” added Brown.

The goal of the new rule was to have a positive impact on investments to the province’s small and medium enterprises, noted Brown.

Under the new policy, accredited investors include accredited financial institutions and loan or trust corporations, insurance companies, governments, registered charities, securities advisers and dealers. As well, individuals with net financial assets exceeding $1 million in value, or with a net income of more than $200,000 for the two previous years and prospects for similar income in the current year, can be accredited investors.