The BC government proposes sweeping changes to the Securities Act (British Columbia) (the “Act”), which will allow the British Columbia Securities Commission (“BCSC”) to better address white collar investment crime. Proposed through Bill 33 Securities Amendment Act, 2019, the amendments will provide the BCSC with some of the strongest powers in Canada to protect

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On March 27, 2017, for the first time in Canadian history, an appellate Court revoked a voluntary settlement made between an individual and a securities regulator. Agreeing with the grounds for appeal raised in Mr. Daniel Pharand’s notice of appeal and in view of the Court of Appeal’s decision to grant leave to appeal to Mr. Pharand, the Autorité des marchés des financiers (“AMF”) acquiesced to the entirety of the conclusions sought by Mr. Pharand in appeal, including the dismissal of the proceedings instituted by the AMF against Mr. Pharand.

In the matter of Daniel Pharand v. Autorité des marches financiers et al.[1], Mr. Daniel Pharand, a former director of Arura Pharma Inc. (“Arura”), had entered into a settlement agreement with the Autorité des marches des financiers (the “AMF”) in which he was asked to make a number of admissions of fact and law. In particular, Mr. Pharand was required to admit that he had sold shares of Arura while in possession of privileged information (or material non-public information) thus breaching section 187 of the Québec Securities Act, the prohibition against insider trading.

Mr. Pharand entered into the settlement to avoid engaging in an expensive seven day trial, the cost of which would have greatly exceeded the $8,700 fine being sought against him (and the $5,000 fine he ultimately agreed to pay in the settlement). The AMF also entered into a settlement with Mr. Jacques Gagnon, but Mr. Gagnon did not appeal the decision sanctioning the settlement agreement.


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On November 5, 2015 securities regulatory authorities in Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia (Participating Jurisdictions) published in final form the long awaited crowdfunding regime: Multilateral Instrument 45-108 Crowdfunding (Crowdfunding Regime) which includes a crowdfunding prospectus exemption (Crowdfunding Exemption) and a registration framework for funding portals. The

The OSC has published decisions relating to certain relief from the CRM2 requirements that were to come into effect during 2015 and 2016.  The relief is consistent with that set out in CSA Staff Notice 31-341 – Omnibus/Blanket Orders Exempting Registrants from Certain CRM2 Provisions of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant

Les Autorités canadiennes en valeurs mobilières (les ACVM) ont récemment publié les modifications définitives qu’elles entendent apporter au Règlement 45-106 sur les dispenses de prospectus et d’inscription (qui sera d’ailleurs renommé le Règlement sur les dispenses de prospectus) (le Règlement 45-106). Ces modifications concernent les dispenses de prospectus fondées sur l’investissement d’une somme minimale ainsi que sur la notion d’investisseur qualifié. Sous réserve de l’obtention des approbations ministérielles requises, les modifications entreront en vigueur le 5 mai 2015.

Modifications importantes

Pour le gestionnaire de fonds d’investissement ou le courtier, les modifications importantes sont les suivantes :

  • la dispense fondée sur l’investissement d’une somme minimale ne sera plus disponible pour les personnes physiques;
  • la définition d’investisseur qualifié sera modifiée afin de :
    • permettre aux comptes gérés sous mandat discrétionnaire ontariens d’acquérir des titres de fonds d’investissement sous le régime de la dispense pour placement auprès d’investisseurs qualifiés, tel que permis dans les autres territoires membres des ACVM;
    • ajouter les fiducies créées par des investisseurs qualifiés pour les membres de leur famille à titre d’investisseur qualifié;
    • ajouter l’exigence de remettre une déclaration de reconnaissance de risque rédigée en langage clair (l’Annexe 45-106A9) aux investisseurs qualifiés qui sont des personnes physiques.

De plus, en modifiant l’Instruction générale au Règlement 45-106 sur les dispenses de prospectus et d’inscription (l’IG 45-106), les ACVM fournissent des indications additionnelles sur les pratiques servant à vérifier si les souscripteurs respectent les conditions de certaines dispenses de l’obligation de prospectus.

Dispense fondée sur l’investissement d’une somme minimale

Le seuil de 150 000 $ de la dispense de prospectus pour investissement d’une somme minimale n’est pas modifié. Par ailleurs, cette dispense ne sera plus disponible pour les personnes physiques puisque les ACVM sont d’avis que ce seuil n’est pas un bon indicateur des connaissances des investisseurs individuels ou de leur capacité à assumer les pertes financières.
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The Canadian Securities Administrators (CSA) recently published final amendments to National Instrument 45-106 Prospectus and Registration Exemptions (to be renamed Prospectus Exemptions) (NI 45-106) relating to the accredited investor and minimum amount investment prospectus exemptions. Subject to Ministerial approval, the amendments will come into force on May 5, 2015.

Key Changes

From a fund manager/dealer’s perspective, the key changes are as follows:

  • The minimum amount exemption (MA Exemption) is no longer available to individuals;
  • The accredited investor exemption (AI Exemption) is amended to :
    • in Ontario, allow fully managed accounts to purchase investment fund securities as an accredited investor, as is already permitted in other Canadian jurisdictions;
    • add trusts established by accredited investors for their family members as a category of accredited investor;
    • add a requirement to obtain a new “plain language” risk acknowledgement form (Form 45‑106F9) from “individual” accredited investors;

In addition, the CSA provides additional guidance relating to practices for verifying if purchasers meet the conditions for relying on a prospectus exemption in amendments to Companion Policy 45‑106CP Prospectus and Registration Exemptions (to be renamed Prospectus Exemptions) (CP 45‑106).

MA Exemption

The $150,000 threshold of the MA Exemption has not been changed. However, the MA Exemption will no longer be available to individual investors, as the CSA does not believe the threshold to be a proxy for sophistication or the ability to withstand financial loss for individual investors.
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On November 27, 2014, the Canadian Securities Administrators (CSA) published for comment proposed amendments to various National Instruments which, if adopted, would overhaul how rights offerings under the rights offering prospectus exemption are conducted. The amendments would also have minor revisions to the requirements of rights offerings conducted by way of prospectus.  The CSA indicate that the amendments are meant to make the rights offering exemption more accessible by streamlining the process.

A rights offering is a financing where the issuer grants to its current securityholders one right per security held. The right or a certain number of rights would then be exercisable prior to the expiry date to purchase an additional security of the issuer at a certain subscription price. The issuer can issue these rights under a prospectus or by using a prospectus exemption.

The proposed amendments include amendments to National Instrument 41-101 General Prospectus Requirements (NI 41-101), National Instrument 44-101 Short Form Prospectus Distributions, National Instrument 45-102 Resale Restrictions, Companion Policy 45-106CP to NI 45-106 and Companion Policy 41-101CP to National Instrument 44-101.

Summary of Amendments

Currently, National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106) provides a specific prospectus exemption (Current Exemption) for rights offerings which comply with National Instrument 45-101 Rights Offerings (NI 45-101). However, the CSA note that the Current Exemption is not commonly utilized because rights offerings complying with the Current Exemption are time consuming and costly. Under the proposed amendments, NI 45-101 would be repealed and the Current Exemption would be replaced by a new exemption in NI 45-106 (New Exemption) that would substantially change the requirements for a prospectus exempt rights offering.

Below is a summary of the major changes under the New Exemption:

  • Availability: Only reporting issuers, other than certain investment funds, would be able to utilize the New Exemption. In addition, the Current Exemption would be repealed, meaning there would no longer be an ability for non-reporting issuers to undertake a rights offering under a specific rights offering prospectus exemption.
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The British Columbia Securities Commission (BCSC) has issued a notice dated March 20, 2014 requesting comments on whether the BCSC should consider adopting an exemption which would allow equity financings of small amounts raised from many individuals (as a form of Crowdfunding) through online portals (Portals) to be exempt from the prospectus requirements.  The notice was released concurrently with proposed start-up Crowdfunding rules  in certain other Canadian jurisdictions (see related posts by our colleagues from the Toronto and Montreal offices of Fasken Martineau DuMoulin LLP) and follows the implementation of a similar prospectus exemption for Crowdfunding in Saskatchewan.

If adopted, the Start-Up Crowdfunding exemption would join the already existing British Columbia exemptions, which include the private issuer; family, friends and business associates; accredited investor; and offering memorandum exemptions (Existing Exemptions).

In order to use the Start-Up Crowdfunding exemption, among various other requirements, an issuer must:

  • not be a reporting issuer or an investment fund;
  • not raise more than $1,500 from any one investor or exceed gross proceeds of more than $150,000 per offering;
  • not make more than two offerings per year;
  • complete the offering through a Portal; and
  • provide a streamlined offering document to investors through the Portal.

The Start-Up Crowdfunding exemption would permit
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On March 20, 2014, the Ontario Securities Commission (OSC) published a Notice and Request for Comment proposing four new capital raising prospectus exemptions in Ontario.  As previously discussed in Timely Disclosure, the OSC initiated a consultation process in December 2013 to consider prospectus  exemptions to facilitate capital raising.

One of the new exemptions proposed is the crowdfunding exemption that would allow businesses to raise capital from a potentially large number of investors through an online portal registered with the securities regulators (Crowdfunding Exemption). The Crowdfunding Exemption, along with offering memorandum exemption, friends, family and business associates exemption, and existing securityholder exemption, were proposed by the OSC in an effort to provide startups and small and medium sized enterprises (SMEs) with greater access to capital markets.
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The Autorité des marchés financiers (Québec), the Financial and Consumer Affairs Authority of Saskatchewan, Financial and Consumer Services Commission of New Brunswick, the Manitoba Securities Commission and the Nova Scotia Securities Commission (CSA Participating Jurisdictions) published on March 20, 2014 for a 90-day comment period

  • the integrated Crowdfunding Prospectus Exemption (Crowdfunding Exemption); and
  • the draft blanket order relating to the Start-up Crowdfunding Prospectus and Registration Exemption (Start-up Exemption).

In line with the Crowdfunding Exemption and the Start-up Exemption, the CSA Participating Jurisdictions also published proposed registration rules and exemptions applicable to the funding portals participating in crowdfunding (Portal Requirements).

The Ontario Securities Commission concurrently published materials relating to, among other exemptions, a crowdfunding exemption and related portal requirements, by way of a local notice.  The British Columbia Securities Commission also concurrently published a local notice soliciting comments on the Start-up Exemption. The Financial and Consumer Affairs Authority of Saskatchewan implemented an exemption for start-up and small businesses and their portals on December 6, 2013. No portals have yet been established in Saskatchewan. Although the Alberta Securities Commission has not published any material, it will be considering the public comments received in respect of the other published materials.

This bulletin focus on the Portal Requirements under both the Crowdfunding Exemption and the Start-up Exemption. You can read our reports on the Start-up Exemption and the Crowdfunding Exemption. Both the Crowdfunding Exemption and the Start-up Exemption will coexist as they target issuers at different stages of development.
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