Question: Can a “Term Sheet” be an Offering Memorandum?


In some circumstances, yes.

In Ontario, an offering memorandum (an OM) can be any document, or a collection of documents, that describes the “business and affairs” of an issuer that was prepared for the primary purpose of delivery to and review by prospective purchasers to assist them in making an investment decision. The full definition of an OM is contained directly in securities legislation.

The definition of an OM specifically excludes a document that sets out current information about an issuer for the benefit of a prospective purchaser already familiar with the issuer through prior investment or business contacts.

It is very important to determine early on whether a term sheet or other marketing documents constitute an OM, as it will impact the potential liability of the issuer and certain other parties, as well as disclosure, update and filing requirements.

The definition of an OM can be broadly interpreted, and may include documents such as promotional materials, term sheets, confidential promotional memoranda and slide decks.

All marketing documents must also be reviewed in the context of other documents provided to investors when considering the proper characterization.

AUM Law would be pleased to assist you in your marketing reviews or if you have any questions with respect to your exempt trade report filing obligations.

April 28, 2023