On February 19, the Ontario Securities Commission announced that it is introducing a family, friends and business associates prospectus exemption intended to be substantially harmonized with the exemption available in other Canadian jurisdictions.
The exemption will allow issuers other than investment funds, subject to certain conditions, to distribute securities to the issuer's directors, executive officers, control persons and founders, as well as certain family members, close personal friends and close business associates of such persons. Much like in the case of the CSA's recently-announced amendments to the accredited investor and minimum amount investment prospectus exemptions, Ontario's new exemption will require that purchasers sign a risk acknowledgement form in order for issuers to rely on the exemption.
Assuming Ministerial approval, the new exemption will come into force on May 5, 2015, at which time, the existing "Founder, Control Person and Family Exemption" under National Instrument 45-106 Prospectus and Registration Exemptions (which was only available in Ontario) will be repealed. The introduction of the new exemption also corresponds with the adoption of the CSA's changes to accredited investor and minimum amount investment prospectus exemptions in NI 45-106, which will also come into force on the same date along with various other consequential amendments.