The Alberta and British Columbia securities commissions have announced proposed new capital raising rules which will make it easier for businesses to raise money from investors in the two provinces.

The new rules are the product of a joint project of the two commissions undertaken in response to industry comments that the cost of raising money is too high, especially for small and medium-sized businesses.

“The new rules will make it easier and less expensive for issuers to raise capital in Alberta and British Columbia and should particularly benefit small business,” said ASC chair Stephen Sibold.

“This joint BC/Alberta initiative is important as it will harmonize the rules in the two provinces and will provide greater investment opportunities for investors without compromising investor protection,” added BCSC chair Doug Hyndman.

The proposed rules provide new and expanded exemptions from the current prospectus disclosure requirements that typically apply to issuers raising money from the public.

The current capital raising costs can be particularly burdensome to the junior companies that make up a significant portion of the Alberta and BC capital markets.

The are four proposed harmonized exemptions.

The offering memorandum exemption allows issuers to raise any amount of money from anyone provided that the investor acknowledges the risks of investing and receives an offering memorandum. Investor protection provisions will also be added giving purchasers almost identical rights to those they get under a prospectus.

The accredited investor exemption allows issuers to raise any amount of money from various financial institutions, pensions, investment dealers, established companies and wealthy individuals without a disclosure document.

The family, friends and business associates exemption allows issuers to raise any amount of money from family members, close friends and close business associates without a disclosure document.

The private issuer exemption increases the ability of private companies to raise money while remaining private.

The new capital raising rule and accompanying documents have been published on the Websites of the ASC (www.albertasecurities.com) and BCSC (www.bcsc.bc.ca). Public comments are invited until November 30.