Date Published: Dec 1, 2022
Transcript: Available

Video Transcript:

Here’s some good news if you’re a public company looking to raise funds and you currently trade on a stock exchange in Canada.

The Canadian Securities Administrators, which co-ordinates the regulations for the Canadian capital markets, has announced the long awaited “Listed Issuer Financing Exemption”.

This new prospectus exemption provides a more efficient way for issuers listed on a Canadian stock exchange to raise capital.

It reduces costs for issuers raising smaller amounts of money and give them greater access to retail investors.

Retail investors will now have access to investment opportunities traditionally available only to institutional and accredited investors and those closely connected to the issuer, while eliminating the 4 month hold period.

It also gives investors all the protections of a prospectus including statutory rights of withdrawal, recission, and damages.

Rather than filing a short form prospectus, qualifying public companies will prepare a short offering document, which in British Columbia is Form 45-106F19.

To use this exemption, the issuer must meet a few requirements.

Be a reporting issuer for the 12 months prior to issuing a news release announcing the offering.

Have equity securities listed on a Canadian stock exchange.

Be current with continuous disclosure documents.

Have an active business, which eliminates investment funds, CPCs, SPACs or growth acquisition companies.

With respect to the securities offered, they can only be equity securities or units consisting of equity securities and warrants convertible into listed equity securities.

Total proceeds over any 12-month period cannot exceed the greater of:
$5 million or 10% of the market cap as at the date of the news release that announced the offering, to a maximum of $10 million.

Over a 12-month period, an issuer cannot issue securities that result in an increase of more than 50% of the issued and outstanding shares.

At the time of the distribution, the issuer must have funds available to meet its business obligations for the following 12 months.

There are a few restrictions on the use of proceeds.

The funds cannot be used for:
A significant acquisition
A restructuring transaction
Any transaction that requires shareholder approval

Before running out and collecting cheques, the issuer must issue a news release announcing the offering and complete Form 45-106F19, which is available at www.BCSC.BC.CA

Both these documents must be filed in each jurisdiction where the offering is being conducted, even if the issuer is not a reporting issuer in that jurisdiction.

The offering document is fairly simple to complete and must include the following.
Details of the offering such as the type and number of securities being offered, the price and the minimum and maximum amount being raised.

A description of the business including what it does, recent developments, material facts, and business objectives and milestones.

Use of available funds, along with details of how the funds were used that were raised in the previous 12 months.

Details of any fees to be paid to dealers or finders.

We’d like to thank Capiche Capital Technologies for their assistance in providing this information.

Before your next private placement, go to www.capiche.io and request a demo.

They live up to their motto “Capital raising simplified”.