Canadian securities administrator’s new OM exemption

INTRODUCTION

This project regarding the new OM (Offering Memorandum) Prospectus Exemption type in Canada, has been the subject of quite extensive debates both locally, nationally and internationally, being on the agenda of conferences, colloquia and various meetings on legal topics of practitioners interested in this topic. The changes provided in the act of the Memorandum are most often seen with good eyes, in the specialized practice, which have been demanded and imposed, by the investors eager for a practice and an accomplishment of the provisions as clear and comprehensive as possible.

The mentioned field is a very controversial one, which benefits from a well-known notoriety and which regulates and delimits the provisions in the field. The things and the primacy of the plans are discussed for a good period of time, until they benefit from regulations and adjustments required by the interested practitioners, who were facing a series of misunderstandings and interpretations at the level of specific legal norms.

UNDERSTANDING THE CANADIAN SECURITIES ADMINISTRATOR’S NEW OM EXEMPTION

In order to better understand the Canadian Securities administrator’s new OM Exemption, it is necessary to point out some interesting and relevant aspects for this matter. On this very interesting aspect for the specialized practice, there were numerous discussions, arguments and even controversies. In the autumn of this year, 2020, the specialists in the furniture industry, tried to highlight certain important points, proposed for analysis and also the issues and arguments on which they are based.

The aspects considered and proposed to be changed, have in the foreground practically, a practice as precise, concise and unitary as possible in this field, without too many interpretations and dubious aspects, as it has been encountered in specialized practice. This, of course, has an increased confidence, immediately coming to the aid of investors.

In principle, the method of adjustment provided for in the Offering Memorandum, as provided for, was initially structured as a welcome aid to small groups and businesses.

It was seen that this means was used mainly by bodies with a composite ensemble, which were in the field of real estate expansion or the like with common and specific interests. In principle, all the structuring and the quite consistent amendments and transformations brought, help to identify the category of issuers, which is most often used, by the adjustment and decrease proposed by the Offering Memorandum.

The new changes that have been made to this field, involve new elements for the field and real estate structure. This fact implies leaving out all the issuers in question, which deal with, among others and have as object business from which they earn significant amounts of money per month from certain types specific to the real estate field, such as sales, but also others such as and methods of obtaining income from oil-related business.

Furthermore, we mention in the discussion an important aspect according to which, in full agreement with the changes that have been submitted and assumed, these issuers in question are completely under the power and must adapt to the new rules, in terms of the exemption regulated by the Offering Memorandum in question.

Here we mention by way of example:

  1. The realization of a certain specific type and in accordance with the pursuit of assisting in the field of real estate ownership, in the concrete situation in which the person in question
  • it is assumed that he bought as the case may be, or in the future he will receive a specific percentage from a certain subject of a real estate property,
  • an established percentage, at the type of real estate, is revealed in the mentioned act, Memorandum,
  • in the probable situation in which the issuer is assumed that in the future, he wastes an important amount, in view of a provided interest.
    1. The addition of a new issue, that specific act, number 45. It will have to mention, clearly regarding the issuers, who have businesses in the real estate sphere, the revelation of insolvency, or as the case may be, convictions, or any other reprimand or sanction applied, finally aiming to reveal the whole thread of applications and any property-related relationships.

We further add important issues regarding those concerned with the public placement of capital in vehicles, involving several persons, known as “collective investment vehicles”. This ultimately involves placing capital in a range of movable assets, this time. This aspect stands out mainly and brings into discussion practically none other than the groups of people who have, as the case may be, receivables, or even loans in question, or other such types of circumstances. As well as news regarding this act, we also refer to the fact that all issuers alike, with investments of this type, collectively, it is imperative to rally and comply with the idea of drawing up a certain calendar, in the situation where I wish to benefit from the exemption offered by the Memorandum.

This presentation must be limited to the overall objectives of the investment in question and also to reveal the sanctions applied or convictions and its history from this point of view, in order to achieve a clearer picture of the issuer. The planned news, we must say, will be important for the category of multinational companies that deal with the mortgage investment in Canada, which receive orders and are subject to the obligations and rules in force in this state.

OM EXEMPTION IN CANADA AND NECESSARY CLARIFICATION

The Offering Memorandum in Canada, and all its changes and restructurings in its content and overall, are intended to facilitate the work and understanding of practitioners in this field, providing a more structured and cohesive picture of the rules, understandable to all, including and the primary purpose of helping investors.

The splits in the memorandum are relevant for specifying the elements of the items in the exemption, regarding the disclosure of changes in the idea of being easier to understand for both parties of investors, but also of issuers, the ability to find and identify certain passages in the digital sphere, important relevant aspects and additions to the controversial act number 45, certain things for people not informed especially of issues appear in the format provided, to help reveal to a separate issuer, or the appearance of criminal convictions concerned.

Significant splits are also observed on the form number 45, in terms of risk, changes that allow greater accuracy, clarity and transparency for interested parties who wish to access this information.

In order to understand these notions, it is also important to discuss the presentation of the problems related to overflowing capital growth, mentioning:

  1. The category of those who place an accredited capital. Through it, there is the real possibility to capitalize, the movable goods, the categories of interested people who:
  • may have, as the case may be, values, held both in their own name and in co-ownership, together with their life partner, husband,
  • hold certain deposits in banks
  • net values

We further specify that some companies may choose between the possibility of alienation, movable property, to various organizations, foundations, or the like.

An important thing to mention is the one according to which, a threshold is not yet mentioned, regarding which to draw attention to the recognized investors, to the way in which they can place a capital.

  1. Financing projects using online resources. This phenomenon implies, among other things, a benefit recognized to Canadian companies, especially those at the beginning of the road, helping them to have the opportunity to somehow sell real estate, and this due to a specific platform. It is worth mentioning that in terms of banks, they have the power to decide how much money they will invest, without imposing any restrictions.
  2. The active subject of security. Through the provided exemption, the firms on the list of stock exchanges have the real possibility to alienate stocks of movable type, to the capital investors already provided.
  3. Business component members. The exemption provided gives the possibility to alienate the firm, the owners, the associates components of the respective business, or in some cases to their comrades. Again, we bring into question, the fact, that there is no maximum threshold regarding the level of investment of those who want to place a capital.
  4. Providing a minimum investment threshold. This issue refers to the fact that companies have the chance to alienate goods to certain companies, subject to certain conditions and not only to individuals.

CONCLUSION

Therefore, as I mentioned before, this regulated project in Canada is auspicious and welcome among practitioners who have been waiting for it for some time. It comes to regulate and regulate interpretable practices and norms, which left room for assessments out of place by decision makers. In this way, the OM Exemption is structured and cohesive in clear, concise provisions that undoubtedly help all those who appeal and use the content of the rules provided. The Offering Memorandum comes in support of many categories of applicants, who have raised over time various issues related to the understanding of the text provided in the Memorandum. The year 2020 therefore tries to improve the relevant practice and to help as well as possible the investors in this field.