Download PDF:
FCNB Proposed Repeal and Replacement of Local Rule 45-509 Community Economic Development Corporations and Cooperatives
Letter Summary:
This local rule in New Brunswick provides a registration and prospectus exemption for Community Economic Development Corporations (“CEDCs”) and cooperatives which are registered under the Small Business Investor Tax Credit Act in the province, and the proposed replacement rule is intended to reflect the province’s new Cooperatives Act. The new rule and companion policy will require a new risk acknowledgement form and exempt distribution form with information relevant for a distribution of securities by a CEDC, and will also deem CEDCs to be market participants, allowing the regulator to conduct compliance reviews. The mandated form of offering document would also be amended to include additional
Overview of the Council’s Comments:
The CAC are supportive of measures taken to try to assist small and emerging companies to finance their growing operations without compromising investor protection and are also strong supporters of harmonizing Canada’s registration and prospectus exemptions across provincial jurisdictions for ease of use and common understanding by issuers and investors. We support the proposition that the same disclosure forms for various offerings (such as syndicated mortgages or CEDCs) should be utilized and then modified as needed to reflect the unique nature of the offering. The CAC does have some concerns about the potential lack of audited disclosure on the financial condition of the issuers utilizing these exemptions and we believe it is important that the annual financial statements provided to the Commission and to investors be audited.