Securities regulators in 10 other jurisdictions have joined Alberta in providing a new exemption from key requirements for issues made by offering memorandum (OM).
On Thursday, the Alberta Securities Commission (ASC) announced that it had issued an order providing relief from the requirement under the OM exemption for an audit of annual financial statements, subject to certain restrictions — companies relying on the exemption can raise a maximum of $500,000 in a 12-month period, and there’s a $2,000 limit for each investor. The new relief aims to help early stage companies raise capital.
Regulators in various other jurisdictions announced Friday that they have issued similar orders. In addition to Alberta, the securities regulators in Québec, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, and in the Yukon, Northwest Territories, and Nunavut are each publishing harmonized interim local orders providing the same relief.
In addition to the exemption from the requirement to obtain an audit of their financial statements, issuers that satisfy the conditions in the orders may have their financial statements prepared using generally accepted accounting principles (GAAP) for private enterprises rather than GAAP applicable to publicly accountable enterprises (IFRSs). The other requirements of the current offering memorandum prospectus exemption remain in effect.
Jurisdictions that have issued a blanket order are inviting comments on these orders and their terms until Feb. 20, 2013. These orders come into effect Friday and expire on Dec. 20, 2014.