Securities Regulatory Authorities Propose New "Existing Security Holder" Prospectus Exemption

In an effort to reduce the cost of capital and provide greater access to a larger pool of investors, the securities regulatory authorities (“SRA”) in all Canadian provinces, except Ontario and Newfoundland and Labrador (“Participating Jurisdictions”) have released for public comment, Multilateral CSA Notice 45-312 – Proposed Prospectus Exemption for Distributions to Existing Security Holders.

This proposed prospectus exemption is open for public comment until January 20, 2014, and would allow TSX Venture Exchange (“TSX-V”) listed issuers to distribute securities to existing security holders (the “Existing Security Holder Exemption”).

Absent from the above group of SRA is the Ontario Securities Commission (“OSC”). However, the OSC recently announced its support for the proposed Existing Security Holder Exemption and will seek substantial harmonization in developing its own exemption.