This submission was made on January 20, 2014, by the
Private Capital Markets Association of Canada (PCMA)
(formerly the Exempt Market Dealers Association of Canada)
in response to the request for comments published by the
Canadian Securities Administrators (the CSA) on November
21, 2013 in connection with the Proposed Exemption.
British Columbia Securities Commission, Alberta Securities Commission, Financial
and Consumer Affairs Authority of Saskatchewan, Manitoba Securities Commission,
Ontario Securities Commission, Autorité des marchés financiers
Financial and Consumer Services Commission (New Brunswick), Nova Scotia
Securities Commission Prince Edward Island Securities Office, Office of the Yukon
Superintendent of Securities, Office of the Superintendent of Securities, Government
of Northwest Territories Legal Registries Division, Department of Justice, Government
of Nunavut, British Columbia Securities Commission
The PCMA is broadly supportive of the
Proposed Exemption and applauds the introduction
of appropriately designed prospectus exemptions
designed to facilitate fair and efficient capital raising
and investor protection in the Canadian marketplace.
We are mindful, however, that not all CSA members
have agreed to adopt the Proposed Exemption, but are
optimistic that if implemented, the Proposed Exemption
will be adopted in a uniform fashion across Canada.
We encourage the CSA to continue to work with the
securities regulators in Ontario and Newfoundland and
Labrador to ensure a consistent adoption of this and
other prospectus exemptions across Canada.
The PCMA comments on the following questions:
1. If you are a TSXV issuer, would you use the proposed
exemption? Not applicable.
2. Should the Proposed Exemption be available to
issuers listed on other Canadian markets?
The availability of the Proposed Exemption should
be consistent with its stated policy rationale which is
to ameliorate time and cost concerns for issuers in
preparing offering documents while ensuring investors
are suitably protected. The PCMA believes that an
issuer’s marketplace should not, in principle, have
any bearing on either of these issues. Time and cost
burdens should be the same and investor protection
is meant to be afforded by uniform disclosure
obligations and marketplace oversight, not by limiting
issuers to any one marketplace. It is not clear why
other recognized stock exchanges were excluded.
Accordingly, we believe the Proposed Exemption
should be extended to the TSX and the Canadian
Securities Exchange since the basis of the exemption
is a reporting issuer’s public disclosure record on
SEDAR and not marketplace considerations.
3. Investors will only be able to invest $15,000 in a
12-month period unless they obtain advice from a
registered investment dealer. Is $15,000 the right
We believe there should be a limit on the amount
a retail investor can invest under the Proposed
Exemption without obtaining advice from a registrant.
It is not clear on what basis $15,000 was
determined to be the appropriate threshold and some
explanation should be provided. However, the PCMA
has no objection with the proposed investment limit
absent investment advice.
4. In what circumstances would it be suitable for an
investor that is a retail security holder to invest more
than $15,000 in a TSXV issuer?
Limiting the amount an investor can invest who is
a retail security holder and who would not otherwise
qualify under an existing prospectus exemption, such
as the accredited investor exemption, provides a
measure of protection for such investor. The PCMA
believes that an investor should be able to invest
more than $15,000 with advice from an appropriate
category of registrant. The PCMA does not support
limiting the advice to investment dealers only as set
out in the Proposed Exemption.
The PCMA believes that an EMD, in addition to
an investment dealer, should be permitted to provide
advice to investors, and if suitable, the investor should
be able to invest more than $15,000. EMDs are required
to provide such advice in connection with all other
private placement exemptions, including those involving
the private placement of treasury securities by reporting
issuers. The fact that this is a private placement of
treasury securities by an exchange-listed issuer should
make no difference. In fact, the provision of such advice
is a basic obligation under NI 31-103 for EMDs and other
registrants. The PCMA strongly encourages the CSA to
amend the Proposed Exemption to include EMDs to
provide such advice in addition to investment dealers.
5. Do you agree that there should be no investment
limit if an investor receives suitability advice from a
registered investment dealer?
Multilateral CSA Notice 45-312 Proposed Prospectus
Exemption for Distributions to Existing Security Holders
By Brian Koscak and Conan McIntyre
Private Capital Markets
Association of Canada
Private Capital Markets
Association of Canada