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Ontario to introduce OM exemption

Date: Friday, October 30, 2015
Author: James Langton

Several other provinces will revise their OM exemption with a focus on strengthening investor protector

By James Langton |

The offering memorandum (OM) exemption will finally be available throughout Canada as Ontario has introduced a new OM and several other provinces have tweaked their version of it.

A collection of provincial regulators issued a notice on Thursday indicating that the OM exemption will be introduced in Ontario and that the existing exemption in Alberta, Quebec, New Brunswick, Nova Scotia and Saskatchewan will be revised with a view to strengthening investor protection.

Specifically, those investor-protection measures include investment limits on most retail investors; that investors will be required to sign a risk acknowledgement form; and enhanced disclosure requirements.

Assuming that the proposed amendments receive ministerial approval, Ontario's new exemption will take effect on Jan. 13, 2016 while the revised exemptions in the other provinces will kick in on April 30, 2016. The different form of OM exemption that's in use in the other provinces will not be impacted by these amendments, but with the addition of Ontario, some form of OM exemption will now be available throughout Canada. However, these exemptions are still not completely harmonized.

According to the Canadian Securities Administrators' (CSA) notice, the introduction of the OM exemption in Ontario will allow small and medium sized enterprises (SMEs), to enjoy greater access to capital.

"We believe the OM exemption will provide business enterprises with a cost-effective way to raise capital by allowing them to distribute securities under an offering memorandum, while maintaining an appropriate level of investor protection," the CSA's notice says.

In the other provinces, "modifications to the existing OM exemption will introduce new investor protection measures to address concerns observed with the use of the OM exemption in certain of these jurisdictions," the CSA says.

"These amendments will enhance access to capital across Canada while introducing key investor protection measures," adds Louis Morisset, the CSA's chairman and president and CEO of the Autorité des marchés financiers, in a statement.