Multilateral CSA Notice of Publication and Request for Comment Proposed Multilateral Instrument 45-109 Prospectus Exemption for Start-up Businesses

December 17, 2015

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Multilateral CSA Notice of Publication and Request for Comment Proposed Multilateral Instrument 45-109 Prospectus Exemption for Start-up Businesses

Letter Summary:

We understand from the notice accompanying the Proposed MI that the Start-Up Business Exemption is intended to be used by issuers that can not (or do not wish to) utilize the offering memorandum prospectus exemption. However, given the availability of other exemptions (such as the private issuer exemption and the accredited investor exemption) where an offering memorandum is not required to be delivered, we do not see a compelling rationale for an additional prospectus exemption at this time.

Overview of the Council’s Comments:

As we have noted in previous submissions, we wish to stress the importance of implementing a statutory best interest standard on all persons providing investment advice. Such a standard would help ensure that investment under the proposed exemption is in fact in a client’s best interests, and would help mitigate concerns relating to potential conflicts of interest in a private placement
where the issuer is compensating the dealer for locating investors. Investor protection in the exempt market is best enhanced by providing clear risk disclosures, taking steps to verify eligibility to participate in the market, and implementing a best interest standard on all registrants.