The offering memorandum prospectus exemption (OM exemption) came into effect on January 13, 2016 with much ballyhooed promise of facilitating capital raising by allowing issuers and dealers to solicit investments from a deeper pool of potential investors.
However, some users of the new exemption have voiced concerns about its utility. For example, tying a specific dollar amount to a particular “use of proceeds” over the course of a year has proven difficult and impractical, and now that the rubber has hit the road with this exemption some users are suggesting that a cash flow statement from audited financials may be a more practical approach to the current Form 45- 106F16 - Notice of Use of Proceeds. Another concern relates to ambiguity surrounding the definition of a “structured finance product”. We understand the policy rationale for the exemption not being available for structured finance products, but believe that additional guidance on what is “in and out” of the definition is critical. The new exemption does not apply to offering of investment funds, the policy rationale for which is still unclear to us.