A Report from the desk of Tom Houston, member, CATAAllliance National Leadership Council, and Partner, DENTONS on the Chair’s Advisory lunch hosted by Howard Wetston, Chair of the Ontario Securities Commission.
March 7, 2014


John Reid


Canadian Advanced Technology Alliance


Tom Houston. member, CATAAlliance National Leadership Council


March 6, 2014


Ontario Securities Commission Chair’s Advisory Lunch Securities Update

In his capacity as a CATA Leadership Advisor, Mr. Houston was mandated with the task of advancing industry views to the OSC. See below for an edited version of his briefing note.

The participants at the Chair’s lunch were the following:

  • Philip Deck, Extuple Inc. (and formerly MKS Inc.)

  • Lorie Haber, Investor Education Fund

  • Tom Houston, Canadian Advanced Technology Alliance (CATA)/Dentons (Ottawa)

  • Larry Keating, Keating Technologies

  • Richard Remillard, Canada’s Venture Capital and Private Equity Association (CVCA)

  • Jane Rowe, Teachers’ Private Capital

  • Ilse Treurnicht, MaRS Discovery District

  • Kevin Warn-Schindel, OP Trust Private Markets Group

In addition, the Vice Chair of the OSC, Mary Condon, attended.

The discussion at the lunch was fairly high level but we did make the point that a number of recent initiatives by the OSC relating to expanding some of the exemptions available for issuance of shares without the requirement to file a prospectus were welcome and would help to facilitate fundraising for innovation.

Note that it was not appropriate at the lunch to have a detailed discussion on some of these position papers but we will be providing comments on the revised policies on behalf of our firm, which will be consistent with the interests of CATA and our clients in the technology sector.

Note that the OSC has released position papers on introducing a crowd funding exemption in Ontario, which will be similar in many respects to the proposed crowd funding exemptions to be made available in the US pursuant to the JOBS Act. The OSC has also circulated for comment a proposal to add an exemption for offerings pursuant to an “offering memorandum”, which will be consistent with the exemptions available in other provinces. We believe that these initiatives will be supported by the OSC and will be hopefully be introduced later this year after further communication.  

Separately, pursuant to a previous request for comment, the OSC released on February 27, 2014 proposed changes to existing policies relating to the “accredited investor” exemption and the “minimum $150,000” exemption. Some of the provisions around the “accredited investor” exemption are proposed to be tightened up and weI did raise at the meeting a concern that the “accredited investor” exemption not be made more restrictive as it is a principal exemption relied upon by early stage companies raising money beyond the “friends and family” stage.  As mentioned above, we intend to reinforce their point in our comments on the proposed changes.

As previously advised, the OSC has two arguably competing policy objectives, one to facilitate capital formation and the other to protect the investing public. These competing policy objectives are very much in play in the context of the discussions around expanding and tightening up the applicable exemptions. That said, we believe that the OSC understands the need to facilitate capital formation for earlier stage companies and therefore it was very helpful to have an opportunity to make this point directly to the Chair.

++ Action Item: Executives wishing further details on the meeting and industry advocacy on these matters, should contact CATA CEO, John Reid, jreid@cata.ca