On November 27, 2014 the Ontario Securities Commission (“OSC”) announced amendments to OSC Rule 45-501 –Ontario Prospectus and Registration Exemptions, which provide for an exemption (the “Exemption”) that will allow issuers to raise capital in Ontario from their existing securityholders without a prospectus. The Exemption largely resembles that which was adopted by other Canadian securities regulators in March 2014.   Key features of the Exemption include:

  • issuers must have a class of equity securities listed on the TSX, TSXV, CSE or Aequitas NEO (when operational);
  • offerings must be limited to only the class of listed securities or units consisting of the listed security and a warrant to acquire the listed security;
  • dilution is capped at a maximum of 100%;
  • investments are limited to a maximum of $15,000, unless the investor has obtained suitability advice from a registered investment dealer;
  • the offered securities will be subject to the standard four-month hold period;
  • offerings must be made available to all existing securityholders that hold the same type of listed security as of a record date at least one day prior to announcement of an offering; and
  • offered securities need not be allocated pro rata among existing securityholders, but issuers are expected to provide reasonable assurance that investment opportunities will be fairly allocated and the exemption should not cause securityholders to suffer significant dilution.

Pending ministerial approval, the Exemption is expected to come into force on February 11, 2015