3) (a) Do you agree with the revised guidance in sections 2.7
and 2.8 of 45-106CP regarding the meaning of “close personal
friend” and “close business associate”? (b) Is there other
guidance that could be provided regarding the meaning of
(a) Yes, we agree with the revised guidance, but are concerned
that the other CSA members do not agree. If the OSC adopts the
proposed guidance, it should clarify whether there is anything in
the guidance that another CSA member may not necessarily agree
with. It would not be in the public interest for an issuer to satisfy
the definition of a “close personal friend” and “close business
associate” in one jurisdiction to find out later that another CSA
member has a different interpretation.
(b) No, we are not aware of any further guidance that can
be provided regarding the meaning of the terms. However, these
are subjective tests and there is a concern that the OSC or other
CSA member would impose its interpretation over than of an
issuer and/or investor. It would be helpful if the OSC and other
CSA members clarified when enforcement action would be taken
against an issuer and dealer in the event that they got it wrong.
4) Should there be limits on the size of each investment made
by an individual under the FFBA Prospectus Exemption or an
annual limit on the amount that can be invested?
No, the PCMA does not believe there should be limits on the
size of each investment made by an individual under the FFBA
Prospectus Exemption or an annual limit on the amount that can
Risk Acknowledgement Form
5) Does the use of a risk acknowledgement form that is
required to be signed by both the investor and the person at
the issuer with whom the investor has the relationship mitigate
against potential risks associated with improper reliance on
the FFBA Prospectus Exemption?
Yes, the PCMA believes that a risk acknowledgement form
may help mitigate against potential risks associated with improper
reliance on the FFBA Prospectus Exemption and the proposed
form is acceptable.
However, Saskatchewan has a similar risk acknowledgement
form and it does not make sense to have two jurisdictions having
two different forms while all other CSA members requiring no form.
We strongly encourage the OSC to cooperate with the other CSA
members to achieve harmonization of this matter.
Reporting of Distribution
6) We believe it is important to obtain additional information
in Form 45-106F11 to assist in monitoring compliance with
and use of the FFBA Prospectus Exemption. Form 45-106F11
would require disclosure of the person at the issuer with whom
the investor has a relationship. This additional information
is provided in a schedule to Form 45-106F11 that does not
appear on the public record. Do you agree that collecting this
information would be useful and appropriate?
Yes, the PCMA believes that collecting this information is
EXISTING SECURITY HOLDER PROSPECTUS EXEMPTION
It is discouraging that the OSC is considering adopting an
existing security holder exemption that is not identical to the
equivalent exemption adopted throughout the rest of Canada.
This exemption should be available nationally and equally to
all Canadian reporting issuers and investors regardless of their
location. Inconsistent regulation ultimately creates unnecessary
friction, regulatory and investor confusion and increased
The OSC should review public comment letters received
in response to the other provinces and territories request for
comment to the existing security holder exemption. The majority
of these response letters were overwhelmingly in support of the
proposed exemption. The form of the exemption adopted in
these provinces and territories reflects the considered views of
these various CSA members and a wide sector of the market as
represented by the comment letter writers. The OSC should not
ignore these views and adopt a version of the existing security
holder exemption that differs in any respect to that adopted in all
of the other CSA members.
Issuer Qualification Criteria
1) Do you agree with allowing any issuer listed on the TSX,
TSXV and CSE to use the Existing Security Holder Prospectus
Yes, reporting issuers generally have the same continuous
disclosure requirements under Canadian securities laws (with