The prospectus exception will allow more people to access opportunities usually only available to accredited investors
A pilot scheme in Ontario recognizes the range of investment experience held by those who may fall short of requirements for accredited investor status.
While they may have the education and/or relevant industry experience, these individuals are not able to invest in opportunities with a prospectus exemption. In Ontario most capital raised from individuals in prospectus exemptions are accredited investors.
Earlier this year, Alberta and Saskatchewan announced a similar pilot.
"This pilot recognizes that there is a growing pool of sophisticated retail investors in Ontario, whose education and work experience have aptly prepared them to assess investment risks," said Grant Vingoe, CEO of the OSC. "It also reflects the reality that many Ontarians have multiple freelance roles during their careers in which they utilize and develop specialized skills that can support their investment activities."
Pilot requirements
To take advantage of the pilot, investors will have to self-certify that:
- they have met at least one qualifying criteria
- review and complete a risk acknowledgment form confirming they understand the risks of investing.
Investors will also be subject to a $30,000 annual limit on all purchases and can choose to allocate that amount to one or multiple issuers.
This pilot also provides a new source of capital for businesses that are headquartered in Ontario.
Issuers must report the use of the self-certified prospectus exemption by filing reports of exempt distribution. The OSC will use this data to monitor the use of the prospectus exemption and to inform future policymaking.
