As a general comment, the CAC is supportive of the efforts of the Nova Scotia Securities Commission to facilitate reinvestment into the local economy by retail investors who want to invest in businesses within their own communities. However, it is important that the interests of local businesses in accessing capital more quickly and easily do not overshadow the importance of investor protection and transparency in the capital markets. We have a number of investor protection concerns with respect to an exemption available solely to Community Economic Development Investment Funds (“CEDIFs”) from the investment fund manager requirement, as outlined below.
Overview of the Council’s Comments:
We understand that the purpose of the proposed amendments is to focus the disclosure for venture issuers on valuable information reflecting the needs of venture issuer investors, while also streamlining the requirements for the issuers themselves. While we support the change from the original proposal which would have placed all the venture issuer’s continuous disclosure obligations in an entirely separate regulatory instrument, we remain concerned about placing too high a distinction on the nature of the issuer with respect to continuous disclosure requirements. While we appreciate the time and costs involved in maintaining robust disclosure and the resulting impact on the ability of small issuers to access the public markets, we do not believe that those considerations should outweigh the benefits to invest or protection that arise through fulsome disclosure. As a result, we continue to believe that venture issuer should be required to provide the same level of disclosure as other issuers.