statements. However, circumstances may arise where, due to
exigent circumstances, an issuer cannot provide such ongoing
disclosure. In such circumstances, the PCMA believes some form
of relief should be provided by the OSC and other CSA members
that adopt an ongoing disclosure requirement for issuers that raise
capital under the OM Prospectus Exemption.
(b) As per our response to Question #1, we believe that annual
financial statements should be audited, on an ongoing basis, if
an issuer has raised more than a $1 million and expended more
than $250,000, subject to exigent circumstances discussed in our
response to Question 16(a). Where amounts raised are in excess
of $500,000 financial statements should be reviewed by an auditor.
(c) The PCMA believes that review engagement financial
statements are adequate for amounts raised by an issuer under
any prospectus exemption in excess of $500,000, but less than
17) We have proposed that non-reporting issuers that use the
OM Prospectus Exemption must notify security holders of
certain specified events, within 10 days of the occurrence of
the event. We consider these events to be significant matters
that security holders should be notified of. Do you agree with
the list of events?
Yes, the PCMA agrees with this requirement but believe the
time period to provide such specified event disclosure should be
20 days not 10 days following the specified event. We encourage
such ongoing disclosure provided that the OSC and the CSA
consider adopting a form of secondary market trading in the
private capital markets. We submit that this can be considered in
phase two of the Exempt Market Review.
18) Is there other disclosure that would also be useful to
investors on an ongoing basis?
No, we are satisfied with the proposed disclosure requirements.
19) We propose requiring that non-reporting issuers that use
the OM Prospectus Exemption must continue to provide the
specified ongoing disclosure to investors until the issuer either
becomes a reporting issuer or the issuer ceases to carry on
business. (a) Do you agree that a non-reporting issuer should
continue to provide ongoing disclosure until either of these
events occurs? (b) Are there other events that would warrant
expiration of the disclosure requirements?
(a) Yes we agree.
Reporting of Distribution
20) We believe that it is important to obtain additional
information to assist in monitoring compliance with and use of
the OM Prospectus Exemption. Form 45-106F11 would require
disclosure of the category of “eligible investor” that each
investor falls under. This additional information is provided
in a confidential schedule to Form 45-106F11 and would not
appear on the public record. Do you agree that collecting this
information would be useful and appropriate?
The PCMA has no objection to the collection of such
information, however, in the interest of harmonization and to
avoid administrative confusion and complexity, we note that there
will be multiple forms required depending on what jurisdictions
distribution of securities are occurring. In our opinion, it is important
for the OSC to work with the CSA to create harmonization.
In addition, some information is not necessarily made
available to issuers such as individuals email address or age of
investor. Some investors either do not have an email address or
do not wish to provide their email address and receive electronic
communications. We also note that most investor databases store
date of birth, but not the age of investor and extracting that could
require an expensive systems change.
FFBA PROSPECTUS EXEMPTION
Types of Securities
1) Do you agree with our proposal to limit the types of securities
that can be distributed under the FFBA Prospectus Exemption
to preclude novel and complex securities? Do you agree with
the proposed list of permitted securities?
We refer you to our response in Question 5 regarding the OM
2) Should there be an overall limit on the amount of capital
that can be raised by an issuer under the FFBA Prospectus