On August 26, 2020, the U.S. Securities and Exchange Commission
("SEC") expanded the definition of who
qualifies as an Accredited Investor. Placing new emphasis on
knowledge, experience, and Indigenous sovereignty, the SEC has
extended participation in the private equity market to a new groups
of investors. For Canadian corporations, this means a new way to
raise capital without having to file a lengthy prospectus.
Note: The amendments are in effect December 8,
2020.
Background
Generally, under U.S. and Canadian securities laws, corporations
wishing to offer or sell securities to the public must meet strict
disclosure requirements. Although the requirements can be
cumbersome and expensive, they act as a safeguard to protect the
public from making investment decisions on little, or incorrect,
information. A notable exception to these disclosure requirements,
however, is the Accredited Investor exemption.
