On May 26, the Alberta Securities Commission (ASC) published undertakings (Undertakings) from two issuers who agreed to certain controls, training and other requirements to ensure the issuers’ compliance with National Instrument 45-106 Prospectus Exemptions (NI 45-106). The Undertakings are a useful reminder for issuers and their advisers of securities regulators’ continued focus on non-compliance with the terms and conditions of prospectus exemptions in the exempt market.

Pursuant to the Undertakings, the issuers agreed, among other things, to designate several directors, officers or employees (Designated Persons) as responsible for determining whether investors meet the terms and conditions of NI 45-106. The Designated Persons will:

  • Attend training on how to determine whether an investor meets the terms and conditions of the accredited investor (AI) and/or friends, family and business associates (FFBA) prospectus exemptions;
  • Take reasonable steps to confirm that every investor meets the terms and conditions of the applicable exemption being relied upon at the time of distribution; and
  • Make detailed written notes outlining the steps taken to determine whether an investor meets the terms and conditions of the applicable exemption, including the date and time of all relevant communications and any documents reviewed or relied upon.

If they haven’t already done so, issuers that access (or plan to access) the exempt market may wish to consider training and controls similar to those described above. AUM Law has substantial experience helping clients navigate the exempt market and we can help you, too. Subscribe to our publications to obtain a copy of our Exempt Market Roadmap and contact us to discuss your financing plans.