OSC publishes Corporate Finance Branch 2014-2015 Annual Report


OSC News Release | July 14, 2015


TORONTO – The Ontario Securities Commission (OSC) today published OSC Staff Notice 51-725 Corporate Finance Branch 2014-2015 Annual Report.

This report provides key information to the individuals and entities the OSC regulates, as well as their advisors, to help them comply with regulatory obligations. It contains observations and guidance from compliance work conducted by the Corporate Finance Branch in fiscal 2015 in several areas, including continuous disclosure and prospectus reviews.

“We strongly encourage issuers, insiders and their advisors to review the report and to use the findings and guidance presented in the report to inform and strengthen their compliance with Ontario securities law,” said Huston Loke, Director of Corporate Finance at the OSC.

The report also provides details on the branch’s policy initiatives in fiscal 2015, including an update on the OSC’s exempt market initiatives. The exempt market is an integral part of the Ontario capital markets and the OSC has been engaged in a review since 2012, considering ways to foster greater access to capital for businesses while protecting the interests of investors. As part of this ongoing effort, the OSC anticipates publication in final form of an offering memorandum prospectus exemption and a crowdfunding regime and their delivery to the Minister of Finance for decision in the fall of this year.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in the capital markets. Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at


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On pages 21-23 of the report, the OSC also outlines its ongoing work – new tools to raise capital from broad investor base: 

There are two other initiatives intended to facilitate capital raising by businesses from a broad
investor base.

  • Offering memorandum prospectus exemption (OM exemption) – In March 2014, the OSC published for comment an OM exemption, which would allow businesses to raise capital based on a comprehensive disclosure document being made available to investors. The exemption would be available for a wide range of businesses at different stages of development and would provide businesses with access to a broad investor base.
  • Crowdfunding regime – At the same time, the OSC published for comment a crowdfunding regime that would enable early stage businesses to raise capital from a large number of investors through a registered online funding portal. The proposed regime included both a crowdfunding prospectus exemption and regulatory requirements applicable to an online crowdfunding portal.

We worked closely with other CSA jurisdictions in formulating the OM exemption and the
crowdfunding regime. The securities regulatory authorities in Alberta, New Brunswick, Québec and Saskatchewan published for comment proposed amendments to the existing OM exemption currently available in those jurisdictions that were similar to the OM exemption that the OSC published for comment. The securities regulatory authorities in Manitoba, New Brunswick, Nova Scotia, Québec and Saskatchewan published for comment the crowdfunding regime.

The comment period ended in June 2014 and the participating CSA jurisdictions collectively received approximately 916 comment letters regarding the OM exemption and approximately 45 comment letters regarding the crowdfunding regime.

We have reviewed the comment letters and discussed the feedback from stakeholders with the other participating CSA jurisdictions in order to move forward in a collaborative, harmonized manner, where possible. In addition, we have consulted with our advisory committees, including the Exempt Market Advisory Committee and the Small and Medium Enterprises Committee, to develop responses to the feedback that appropriately balance efficient capital formation and investor protection.

Two key themes emerged in the comment letters.

  • Need for greater harmonization – Several stakeholders highlighted the benefits of
    harmonized regulation of the exempt market. In response to those comments, we have worked closely with the other participating CSA jurisdictions to achieve greater harmonization, where possible.
  • Concerns regarding restrictions on capital raising – Several stakeholders expressed
    concerns that certain aspects of the proposals, such as the proposed investment limits, may
    have been too restrictive to significantly facilitate capital formation. As a result, we plan to
    make changes to respond to those concerns.

To address these questions, we would like to share with stakeholders our plan for moving forward.

  • Timing – The OSC intends to publish the OM exemption and crowdfunding regime in final form and deliver the rules to the Minister of Finance for decision in fall 2015.
  • Planned direction – After taking into account the feedback from stakeholders, our intention is that the final form of these capital raising tools in Ontario will include the following key elements.

OM Exemption

Crowdfunding regime

  • comprehensive disclosure document at point of sale
  • no limit on the amount of capital an issuer can raise
  • investment limits for investors, other than those who would qualify as accredited investors or investors who would qualify to invest under the family, friends and business associates exemption, substantially along the following:
    • in the case of a purchaser that is not an eligible investor, $10,000 in a 12-month period
    • in the case of a purchaser that is an eligible investor, $30,000 in a 12-month period
    • in the case of a purchaser that is an eligible investor and that receives advice from a portfolio manager, investment dealer or exempt market dealer that an investment above $30,000 is suitable, up to $100,000 in a 12-month period
  • risk acknowledgement form signed by investors
  • ongoing disclosure made available to investors, including audited annual financial statements, annual notice regarding the use of the money raised and notice of a limited list of significant events
  • streamlined offering document at point of sale
  • limit of $1.5 million on amount an issuer group can raise in a 12-month period
  • all investments through a funding portal that is registered with securities regulators
  • low investment limits for investors who do not qualify as accredited investors ($2,500 in a single investment and $10,000 under the exemption in a calendar year) with higher investment limits for accredited investors and no investment limits for permitted clients
  • risk acknowledgement form signed by investors
  • ongoing disclosure made available to investors, including annual financial statements, annual notice regarding the use of the money raised and notice of a limited list of significant events

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