of AI status, and specifically consider implementing rules or
providing guidance regarding the circumstances in which it may
be acceptable for EMDs or issuers to rely on such verification
without further investigation.
For example, Crowdbouncer, LLC offers an AI verification
service in the United States. The service is specifically marketed
as a solution to help meet the AI verification requirements involving
Rule 506(c) offerings. The benefits of this verification service
include time and cost efficiencies to both issuers and investors,
as it offers scale advantages to smaller issuers and enables active
investors to avoid verification by multiple issuers. Investors may
also feel more comfortable providing sensitive documents to a
reputable third party instead of a start-up issuer with no history,
which could help address the reluctance of investors to provide
such information as discussed above. But again, this model is not
sufficient under Canadian securities laws.
We would like to thank our readers for their informative feedback.
Although it does not appear that prescriptive guidance on acceptable
AI verification methods will be forthcoming from Canadian securities
regulators, we hope that the views expressed through the survey
and the recommendations discussed above will be considered by
Canadian securities regulators as they continue to evaluate and refine
the AI verification requirements applicable in Canada.
For more information contact:
firstname.lastname@example.org | 416.860.2955
The contents of this article do not constitute legal advice and is provided for
information purposes only. This article does not necessarily reflect the opinions
of Cassels Brock & Blackwell LLP or any of its lawyers or clients or those of
the Exempt Market Dealers Association of Canada. The content of this article
is not intended to be used as a substitute for specific legal advice or opinions.
1. OSC Exempt Market Review – OSC Notice 45-712 – Appendix
C – Capital Raising in Canada and the Ontario Exempt Market.
2. The Alberta Capital Market Report: A Comparative Overview
- 2013 Report, Alberta Securities Commission, May 2013.
3. See: (a) OSC Staff Notice 33-735 – Sale of Exempt Securities to
Non-Accredited Investors, which was discussed in the previous article.
4. In the Matter of Mars VX (June 17, 2013), online: Ontario
Securities Commission < www.osc.gov. on.ca>.
For more information visit www.emdacanada.com
who should attend
Ultimate Designated Persons (UDPs)
Chief Compliance Officers (CCOs)
Exempt Market Dealers, Issuers and Dealing Representatives
Finance professionals and auditors in the exempt market
Common Issues and Solutions