MORTGAGEBROKER mbabc.ca summer 2015 | 45
investmentcap
Challenging the Cap
You maY recall that in march of
2014 the securities regulatory authorities
of alberta, Saskatchewan, ontario, New
Brunswick and Quebec published for comment
proposed amendments to National Instrument
45-106 Prospectus exemptions regarding
section 2.9 offering memorandum. e
proposal included a cap of $30,000 for eligible
investors relying on the offering memorandum
exemption, so that they would not be able to
invest any more than $30,000 in all offering
memorandum investments combined.
e Nova Scotia Securities commission
(NSSc) is now proposing to join these
security regulators. In particular, the NSSc is
proposing similar conditions to the offering
memorandum exemption: that eligible
investors be able to invest up to $30,000,
combined in all investments, or $100,000 with
advice from exempt market dealers.
e proposal from NSSc might just be
a clue as to how the other jurisdictions will
proceed to unveil investor caps on offering
memorandum exempt investments. e good
news for mIcs in British columbia is that B.c.
has not entered the fray on investor caps.
e canadian mortgage Brokers
association wrote to the NSSc to challenge
a number of assumptions contained in the
proposal:
The NSSC Proposal
e rationale for the NSSc proposal is that
"harmonized offering memorandum rules
will benefit Nova Scotia issuers by increasing
the number of jurisdictions where an offering
can be made to raise capital without materially
increasing their compliance burden and costs.
Harmonized offering memorandum rules will
benefit Nova Scotia investors by enabling them
to participate in a greater number of offerings
from other jurisdictions. If Nova Scotia did
not harmonize with the other jurisdictions,
many issuers may not extend their offering to
Nova Scotia investors as it would also increase
the compliance burden and costs to comply
with the Nova Scotia regime. While these
changes may impose new conditions on the
use of the offering memorandum exemption in
Nova Scotia, the resulting harmonization will
decrease the complexity and likely increase its
use in the canadian exempt market."
e problem with this rationale is that it
amounts to harmonization for harmonization's
sake without an analysis of whether the
proposed changes are good policy decisions
which benefit the public interest. It amounts
to imposing change just because others have
imposed those changes elsewhere. changes
which impose bureaucratic hurdles and red
Why Nova Scotia and other provinces should look to B.C.'s offering memorandum
model before implementing a restrictive, unnecessary investment cap
BY SAMANTHA GALE
