On October 25, 2022, the Ontario Securities Commission announced an 18-month pilot that provides a prospectus exemption that gives Ontario investors with qualifying education or work experience access to increased investment opportunities. The exemption also gives businesses headquartered in Ontario access to a new source of capital.
Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
OSC Pilot: New Self-Certified Investor Prospectus Exemption
Fogler Rubinoff | Oct 28, 2022
On October 25, 2022, the Ontario Securities Commission announced an 18-month pilot that provides a prospectus exemption that gives Ontario investors with qualifying education or work experience access to increased investment opportunities. The exemption also gives businesses headquartered in Ontario access to a new source of capital.
- Instrument: The new exemption is set forth in Ontario Instrument 45-507 Self-Certified Investor Prospectus Exemption (Interim Class Order) (the “Class Order“) and was ordered under subsection 143.11(2) of the Securities Act (Ontario).
- Annual Investment Limit: Self-Certified Investors, and their “permitted designates”1, will be subject to a $30,000 annual limit on all purchases under the Class Order. The $30,000 limit is based on the aggregate acquisition cost, after giving effect to the distribution, of all securities acquired by a Self-Certified Investor, and any permitted designates, under the Class Order in the calendar year. These purchases can be allocated to one or multiple issuers.
See: CSA Responds to the Modernization Taskforce Final Report and Encourages Ontario to Adopt Passport Rule to Eliminate Unnecessary Burden
- Pilot period: The Class Order came into effect on October 25, 2022 and remains in effect until the earlier of:
- April 25, 2024, unless extended by the Ontario Securities Commission, or
- The effective date of an amendment to National Instrument 45-106 Prospectus Exemptions that addresses substantially the same matter as the Class Order.
- The Class Order mirrors a similar prospectus exemption adopted in Alberta and Saskatchewan on March 31, 2021. Its adoption in Ontario is part of an effort to explore regulatory responses to the Modernization Taskforce’s recommendation to expand the Accredited Investor prospectus exemption to individuals that have demonstrated a high degree of understanding of investments and markets.
- Resale Restrictions: The Class Order states that the first trade of a security acquired under the Class Order is subject to section 2.5 of NI 45-102 Resale of Securities. That is, securities purchased pursuant to the Class Order will be subject to a 4-month restricted period before the securities become freely tradeable.
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