(September 13 – 10:50 ET) – The Ontario Securities Commission is requesting comment on the latest version of its rules dealing with private placements.
The new rules attempt to correct some problems with existing regulation in that area, while also implementing the recommendations of the OSC’s concept proposal, “Revamping the Regulation of the Exempt Market”.
In response to previous comments received the OSC says it is introducing several new exemptions in this version of the rules “to create an approach to private market regulation that is more consistent with the needs of that market and its investors”.
The OSC is proposing three new exemptions. The Closely-Held Issuer Exemption would permitting issuers to raise a total of $3 million, through any number of financings, from up to 35 investors without concern for the “qualifications” of the investors.
The Family Member Exemption would permit issuers to issue securities on an exempt basis to spouses, parents, grandparents and children of its officers, directors and promoters.
The Accredited Investor Exemption would permit issuers to raise any amount at any time from any person or company that meets specified qualification criteria.
The proposed rules would also implement a statutory right of action for certain exempt trades if an offering memorandum is provided to investors. They would clarify the hold period applicable to exchangeable securities, and they would require that the identity of the purchaser be disclosed.
The commission is also publishing for comment a proposed Multilateral Instrument dealing with the resale of securities. The proposed instrument aims to implement the recommendations of the OSC’s Task Force on Small Business Financing from 1994. This rule will clarify how and when investors can sell the securities they’ve received under the exempt distributions rules.
Comments are due by December 8.
-IE Staff