Anyone wants to participate?
Canadian securities regulators ease financing rules
Reshaping the financing landscape for Canadian public companies, the CSA outlines a major new exemption.
HALIFAX, NS (MINEWEB) -
It is just got a whole lot easier for Canadian companies - juniors most notably - to raise money issuing new shares to existing shareholders.
Today the Canadian Securities Administrators (CSA) outlined a new exemption - effective immediately in most provinces in Canada - that lets any shareholder, regardless of net worth or professional background, individually commit up to $15,000 a year to a financing.
Prior exemptions that let people take part in financings were more stringent and limited to people, for example, with net worths over a C$1 million.
The new exemption was proposed last year by the TSX Venture Exchange largely in response to tight financing markets for smaller junior exploration companies which mostly depend on financings to fund their activities.
The new exemption will widen the pool of potential investors for juniors and other public companies in Canada.
Indeed, in this, the rule, published Thursday, went further than a proposal floated last year which was limited to TSX Venture companies.The CSA said it would open door for all companies on the TSX Venture, TSX and CSE to use the exemption. Further, it said that in using it, companies were required to allow all its existing shareholders to consider taking part in a proposed financings under the exemption.
"The purpose of the exemption is to facilitate capital raising for listed issuers and foster participation of retail investors in private placements, while maintaining appropriate investor protection," said the CSA, an organization which represents provincial and territorial securities commissions, in an outline of the new rule. The exemption is going ahead in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Yukon, Northwest Territories and Nunavut. Ontario is expected to follow with its own, similar rule, later this month, the CSA has said.
Key conditions according to the CSA:
- the issuer must have a class of equity securities listed on the TSXV, TSX or CSE;
- the offering can consist only of a class of equity securities listed on the TSXV, TSX, or CSE, or units consisting of the listed security and a warrant to acquire the listed security;
- the issuer must make the offering available to all existing security holders that hold the same type of listed security;
- unless the investor has obtained suitability advice from a registered investment dealer, the investor can only invest a maximum of $15,000 per issuer under the exemption in a 12-month period;
- the issuer must have filed all timely and periodic disclosure documents as required under applicable securities laws;
- the issuer must issue a news release disclosing the proposed offering, including details of the use of proceeds;
- each investor must confirm in writing to the issuer that, as at the record date, they held the type of listed security offered under the exemption;
- an investor must be provided with certain rights of action in the event of a misrepresentation in the issuer’s continuous disclosure record; and although an offering document is not required, if an issuer voluntarily provides one, the issuer must file the offering document with the securities regulatory authority and an investor will have certain rights of action in the event of a misrepresentation in it.
