The Offering Memorandum Prospectus Exemption

Résumé du livre

In the last few years the US and Canada have suffered low rates of economic growth and associated higher levels of unemployment. These problems seem to have reinvigorated a push by industry, governments and policy makers to consider ways to foster the growth of businesses, and, in particular, small to medium enterprises (SMEs). For example, in 2012 the US Congress passed legislation to amend the Securities Act 1933 to ease restrictions on the capital raising activities by SMEs. Some Canadian regulators are also considering whether restrictions on capital raising by SMEs should be relaxed by, for example, expanding the existing offering memorandum prospectus exemption to all provinces. This exemption, permitted in some, but not all, Canadian provinces, provides a method by which SMEs can raise capital by issuing securities without complying with the more onerous requirements of preparing and filing a prospectus. Given this current debate about whether restrictions on capital raising activities by SMEs should be eased, this article examines the history of this offering memorandum prospectus exemption in Canada, and, drawing upon some data filed with a number of Canadian securities regulators, considers how it is currently being utilized.