Are you an investor who’s been burned after giving money to a “sure thing”? Perhaps you’re a company with a great business idea and all you need is the financing to get things off the ground—what securities law calls an issuer. Maybe you’re someone who can introduce qualified investors to well-researched issuers, so everybody wins. No matter what category you fall into, do you know what prospectus exemptions are? They affect decisions about investing, about raising capital, and about introducing investors to issuers looking for capital.
The four common prospectus exemptions used in private offerings are:
- Private issuer
- Family, friends, and business associates
- Accredited investor
- Offering memorandum
If you are an issuer, do you know which exemptions you rely on? Do you understand your obligations under each exemption? Are you aware that some of the exemptions have different conditions depending on which Canadian jurisdiction your investor lives in?
Exempt market dealers are expected to understand how the exemptions work so that you can be sure the investor is properly qualified under the particular exemption they have chosen. You have an obligation to collect enough information and consider relationships to determine how close two people are when they claim to be a family member, friend, or business associate. You need to understand how different jurisdictions in Canada treat the various exemptions.
Not having accurate information about the exemptions and how investors or potential investors can rely on them can get you into trouble with the regulators.
If you want to learn more about prospectus exemptions and how to remain compliant, our course Dos and Don’ts for Exempt Market Dealers can help you. It’s a 10-module course you can take entirely online and at your own speed to help you better understand the regulations that govern exempt market dealers.
In it, we explain the regulations in plain language and teach you how to remain compliant. To find out more about the program, click on the link: https://bit.ly/3MElK0K
To find out more about our team and the services we offer, visit our website at www.valc.ca
