ASC 31-505 Proposed Revocation

September 17, 2018

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ASC 31-505 Proposed Revocation

Letter Summary:

Since NI 31-103 came into force in 2009, several jurisdictions, including Alberta provided a registration exemption under certain prospectus exemptions, including the accredited investor and offering memorandum exemption. This is known as the “Northwestern Exemption”. The ASC is proposing to revoke the exemption, on the basis that it has had little impact on capital raising in the province, and there has been wide spread non-compliance with the terms of the exemption when it has been used. Other provinces are looking to follow suit.

Overview of the Council’s Comments:

We did not see a compelling rationale to maintain the Northwestern Exemption. The Canadian Securities Administrators are working to enhance the client – advisor relationship through additional regulation and given the heightened regulatory expectations of registrants set out in these proposals, it would be incongruent to continue to allow intermediaries to rely on older registration exemptions for transactions, where absent the exemption, clients would receive vastly more protection.