CSA Adopts Measures To Facilitate Access To Capital By Small Businesses

Author:Mr Michael Bantey and Philippe Décary
Profession:Blake, Cassels & Graydon LLP
 
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Highlights

The securities regulatory authorities in all Canadian provinces and territories except Ontario and British Columbia have issued or have announced their intention to issue harmonized interim local orders that provide exemptions from certain financial statement-related and audit requirements of Form 45-106F2 – Offering memorandum for non-qualifying issuers. Under the OM-form exemption orders, certain issuers relying on the OM exemption are exempt from: the requirement to obtain an audit on financial statements or other financial information the requirement for financial statements to be prepared using Canadian GAAP applicable to publicly accountable enterprises The participating jurisdictions are inviting comments on whether the OM-form exemption orders sufficiently address the financing needs of small businesses and SMEs. On December 20, 2012, securities regulators in all Canadian provinces and territories except Ontario and British Columbia (the participating jurisdictions) issued Multilateral CSA Notice 45-311 – Exemptions from Certain Financial Statement-Related Requirements in the Offering Memorandum Exemption to Facilitate Access to Capital by Small Businesses (the Notice). In accordance with the Notice, harmonized interim local orders (the OM-form exemption orders) providing exemptions from certain financial statement-related and audit requirements of Form 45-106F2 – Offering memorandum for non-qualifying issuers (Form 45-106F2) have been issued by most of the participating jurisdictions, with the others expected to follow.

Background

In Canada, securities legislation requires that purchasers of securities be provided with a prospectus approved by the jurisdiction in which a purchaser is resident that contains full, true and plain disclosure of all material facts relating to the securities being offered. There are, however, broad exemptions from this prospectus requirement.

National Instrument 45-106 – Prospectus and Registration Exemptions (NI 45-106) sets out most of the available exemptions from the prospectus requirement, including the offering memorandum (OM) prospectus exemption (the OM exemption). As described further below, the OM exemption, which is available in all Canadian jurisdictions other than Ontario, allows an issuer to raise money from investors by providing those investors with an OM in prescribed form that the issuer certifies to be accurate, but without entailing approval of the OM by securities...

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