The British Columbia Securities Commission is seeking public input on a proposal that would boost the disclosure requirements for companies raising capital in the exempt market.

B.C.’s exempt market is an important source of financing for venture capital companies. It allows companies to raise money from the public without providing a prospectus. In many cases, the investments are in start-up companies that are higher risk and often illiquid.

“We are proposing that companies raising capital in the exempt market be required to file a new form disclosing more information about the company and monies raised,” said BCSC chairwoman Brenda Leong.

For non-reporting or private companies, investors would get disclosure about their insiders and the promoters who help market their securities, and in effect, the individuals who are running these companies. This information is already publicly available for reporting or public companies.

Also under the new form, both reporting and non-reporting companies would be required to disclose more information about the purchasers of their securities, including purchaser names and any connection they have to the company, as well as the securities purchased.

“This is the type of information that would strengthen investor protection and market integrity by providing more transparency about the exempt market,” said Leong.

“This proposal is another step in the Commission’s integrated strategy to protect investors from the risks of investing in the exempt market and to support legitimate venture capital companies raising money for their businesses. This additional disclosure in B.C. should help investors make more informed investment decisions.”

The BCSC is requesting public comment on the proposal. Commission staff will consider all comments received by November 9, 2010.

IE