OSC Panel Provides Guidance On Fundamental Securities Law Concepts

On May 4, 2016, an Ontario Securities Commission panel (the Panel) issued its Reasons and Decision In the Matter of Future Solar Developments Inc., containing interpretive guidance on three central concepts in securities law:

1. The meaning of "in the business of trading in securities" for purposes of the registration requirement;
2. The extra-territorial regulatory application of Ontario securities law for distributions to investors outside Ontario; and
3. The meaning of "a person that is not the public" for determining the availability of the private issuer prospectus exemption.

Key takeaways from the decision

• Fundraising is part of life for many start-up companies, but that does not mean those start-ups are automatically "in the business of trading in securities". Rather, fundraising may, depending on the particular factual circumstances, be viewed as an ancillary business activity for a company in its start-up phase.