Prospectus Exemption For Distributions To Existing Security Holders

On March 13, 2014, Canadian securities regulators in all jurisdictions except Ontario and Newfoundland and Labrador adopted a prospectus exemption for issuers listed on the Toronto Stock Exchange (TSX), the TSX Venture Exchange (TSXV), and the Canadian Securities Exchange (CSE) that would, subject to certain conditions, allow issuers to raise money by distributing securities to their existing security holders.

Background

Prior to the adoption of this exemption, in order to conduct a distribution of its securities an issuer was required to file and receive a receipt for a prospectus or rely on a prospectus exemption. Generally, this meant that non-exempt purchasers (i.e., retail investors) who wanted to increase their position in an issuer could only acquire additional securities through the secondary market (i.e., a stock exchange) at the market price. This put retail investors at a disadvantage as they were required to pay ancillary transaction costs (such