OSC adopts family, friends and business associates exemption

By Staff | February 19, 2015 | Last updated on February 19, 2015
1 min read

The OSC has published a family, friends and business associates prospectus exemption which is expected to provide a cost-effective way for issuers (other than investment funds) to raise capital from their networks of family, close personal friends and close business associates. Subject to Ministerial approval, the exemption comes into effect on May 5, 2015.

Read: OSC adopts amendments to fee model

The exemption is largely harmonized with an exemption that is currently available in other Canadian jurisdictions. It allows for the sale of securities by a selling security holder or an issuer to principals of the issuer as well as certain family members, close personal friends and close business associates.

The exemption is based on investors having a sufficiently close relationship with a principal of the issuer to assess the capabilities and trustworthiness of the principals and access information about their investment. As a condition to the exemption, a signed risk acknowledgement form must be obtained, setting out the key risks related to the investment and confirming how the investor qualifies to make the investment.

“Early stage issuers will benefit from this exemption as it will provide them with greater access to capital at a critical stage,” said Howard Wetston, OSC chair and CEO. “Investors will also benefit through greater access to opportunities at the ground level, and everyone benefits from greater harmonization across Canada.”

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Advisor.ca staff


The staff of Advisor.ca have been covering news for financial advisors since 1998.