CSA Notice 45-312 Proposed Prospectus Exemption for Distributions to Existing Security Holders

25 11 2013

The Canadian Securities Commission (“CSA”) has published for comment Multilateral 45-312 Proposed Prospectus Exemption for Distributions to Existing Security Holders which, subject to certain conditions, will allow issuers listed on the TSX Venture Exchange (TSXV) to raise money by distributing securities to their existing security holders.

Under the proposal a new prospectus exemption would be available to TSX-V issuers if certain key conditions are met, including the following:

  • the issuer must have a class of equity securities listed on the TSXV
  • the issuer must have filed all timely and periodic disclosure documents as required under applicable securities laws;
  • the offering can consist only of the class of equity securities listed on the TSXV or units consisting of the listed security and a warrant to acquire the listed security
  • the issuer must issue a news release disclosing the proposed offering, including details of the use of proceeds;
  • each investor must confirm in writing to the issuer that as at the “record date” the investor held the type of listed security that the investor is acquiring under the proposed exemption
  • 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 proposed exemption is not more than $15,000;
  • an investor must be provided with certain rights of action in the event of a misrepresentation in the issuer’s continuous disclosure record; and
  • although an offering document is not required, if an issuer voluntarily provides one, an investor will have certain rights of action in the event of a misrepresentation in it

The proposal further discusses several investor protection considerations including disclosure documents, the ability to withstand loss, protection afforded by being an existing shareholder and a record date that must be set prior to the announcement.

You can read the complete notice HERE.

Comments must be submitted in writing by January 20, 2014.


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