The Ontario Securities Commission (OSC) is extending a couple of registration exemptions that aim to facilitate venture funding, but were set to expire in the fall. The extension will allow the regulator to consider possible new rules in this area.
Back in May 2024, the OSC issued orders introducing an angel investor exemption for non-profit angel investor groups, and an “early-stage business” exemption. Both provide relief from complying with dealer registration requirements, subject to certain conditions.
Those exemptions were set to expire on Oct. 25, but the OSC is now adopting rules that would extend these exemptions for another 18 months.
The exemptions were initially adopted in response to recommendations of the Capital Markets Modernization Taskforce, which called for the creation of a “safe harbour” for issuers to raise a certain amount of capital without being registered, and to allow angel investors to finance startups without triggering registration requirements.
According to a notice from the regulator, since the exemptions were introduced, it has engaged with the community to better understand the early-stage capital-raising ecosystem.
This understanding will continue to be informed by the reports that issuers and angel groups must file when they raise capital under the exemptions — which will feed into potential rule making.
“The data in these reports and the stakeholder feedback gathered will be used by the OSC to determine whether to pursue future rule amendments and, if pursued, the scope of these amendments,” the notice said.
The introduction of the new exemptions followed the expansion of OSC’s mandate in 2021 to include fostering capital formation and competitive capital markets, alongside its traditional mandate to provide investor protection and facilitate fair and efficient markets.