OSC announces increased activity in Ontario’s exempt market

The Ontario Securities Commission (OSC) announced that has published OSC Staff Notice 45-715 2017 Ontario Exempt Market Report, which provides a snapshot of the current state of Ontario’s exempt market and a preliminary assessment of recent regulatory reforms.

The report summarizes capital raising activity by corporate (non-investment fund) issuers in Ontario’s exempt market during 2015 and 2016. Additionally, the report examines capital formation by small Canadian issuers in Ontario’s exempt market, and the impact of recently introduced prospectus exemptions.

Providing this data reflects our commitment to transparency and allows us to gauge the effectiveness of recently introduced capital raising tools,” said Paul Redman, Chief Economist at the OSC. “This data also supports the OSC’s ongoing compliance and oversight efforts in the exempt market.

The report revealed increased activity in Ontario’s exempt market, especially among Canadian issuers and among small businesses. In 2016, approximately $27 billion was raised by about 1,600 Canadian issuers from Ontario investors. Approximately 57% of these Canadian issuers that participated in Ontario’s exempt market were small issuers, raising less than $1 million annually. However, despite the large number of small issuers, this group only accounted for less than 1 per cent of annual gross proceeds raised by Canadian issuers.

The report also found that the new prospectus exemptions have gained traction among a sizeable proportion (25%) of Canadian issuers participating in the exempt market. In 2016, approximately 400 issuers relied on the new prospectus exemptions to raise approximately $133 million, with close to half of these issuers raising capital in Ontario for the first time since 2014.

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