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An association seeking to reform Canadian securities regulations has put its concerns in writing and addressed them to the British Columbia and Alberta securities commissions.
Formed last year as a response to the dismal environment for junior mining financing, the Venture Capital Markets Association (VCMA) has held public forums to gather input from the industry and is urging relevant levels of government and securities exchanges to make the necessary changes to free up venture capital.
In the letter addressed to the senior legal counsels of the BC Securities Commission and the Alberta Securities Commission, the VCMA “recommends that all proposed regulations related to individuals investing in publicly listed venture capital companies should be fully removed, thereby allowing all investors to participate as they desire.”
It refers specifically to the proposed Notice 45-312 by the Canadian Securities Commission, which outlines a new prospectus exemption under which issuers listed on the Toronto Venture Exchange can distribute securities to existing shareholders as long as certain conditions are met.
Included among the prospectus exemption conditions are: a $15,000 maximum invested by the investor in the last 12 months; requiring the investor to confirm a “record date” to the issuer; and that the offering can only consist of securities listed on the TSXV plus warrants to acquire them.
The VCMA rejected Notice 45-312 as “not going far enough” in answering industry concerns, saying that the regulations “continue to define venture capital as an investment that must have ‘big brother’ intervention.”
“The VCMA recommends that all proposed regulations related to individuals investing in
publicly listed venture capital companies should be fully removed, thereby allowing all
investors to participate as they desire.”
In working towards a solution, the association proposes that the governing political bodies work together to form a national industry association, which would serve as a regulatory body for venture capital.
Comments regarding CSA Notice 45-312 are being accepted until January 20th.
Read the full VCMA letter here
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