Orders and Exemptions

Decision Information

Decision Content

THE MAN ITOB A SECURITIES COMMISSION THE SECURITIES ACT Order No. 6631 Section 20(1) January 11, 2013 Exemption from certain financial statement requirements of Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers WHEREAS: (A) The Director has made an application to The Manitoba Securities Commission (the "Commission") for an order under section 20(1) of The Securties Act, R.S.M. 1988, c. S.50 (the "Act") for an order exempting issuers, on terms and conditions set out below, from certain requirements of Form 45-1 06F2 for: (a) audits of financial statements, operating statements and financial information, and (b) the preparation of financial statements in accordance with Canadian GAAP applicable to publicly accountable enterprises. (8) Under sections 2.9 and 6.4 of National Instrument 45-106 Prospectus and Registration Exemptions, it is a condition of reliance on the Offering Memorandum Exemption that an issuer, other than a qualifying issuer, deliver to a purchaser an offering memorandum in Form 45-1 06F2. (C) It is appropriate, having regard to the interests of investors and the financing needs of early stage businesses and other small and medium-sized enterprises , on the conditions of this Blanket Order, to provide exemptions from requirements of Form 45-1 06F2 regarding: (a) audits of financial statements, operating statements and financial information, and (b) the preparation of financial statements in accordance with Canadian GAAP applicable to publicly accountable enterprises. (0) Definitions 1. Terms defined in any of the Act, National Instrument 14-101 Definitions, or National Instrument 45-106 Prospectus and Registration Exemptions have the same meaning in this Blanket Order unless otherwise defined herein.
2. In this Blanket "Corresponding OM Order" means an authority the terms of which are substantially similar to this Blanket Order; "Excluded Security" means anyone or more of (a) a by any of (i) an investment fund; (ii) a mortgage investment entity; an issuer to which A it is engaging in or proposes to engage in the business of acquiring, developing or marketing B, it distribution engaging in or proposes to acquiring, developing or marketing real property, (iv) an jurisdiction of Canada or is subject, in a foreign jurisdiction, to reporting obligations similar to those that apply to a reporting issuer in a jurisdiction (b) an security, as that term is defined in National Instrument -102 Continuous Disclosure Obligations; (c) a derivative, other than an option, warrant or other security that is convertible into an equity (d) a linked to a derivative or to another security, other than an equity security "Form 45-1 means Form 45-1 means an issuer (the which either of the following apply: (a) it is an affiliate or (b) it an executive officer or founder who is also an executive founder of first issuer; "Mortgage Investment means a person or company issued by securities regulatory following: following, or both of the following apply: to use any of relevant to acquire an issuer that is in the business of that is a reporting or equivalent in any Canada; the same Offering Memorandum for Non-Qualifying Issuer") together with to of first or or
that invests substantially all of its assets in debts owing to it that are by one or more on property, and whose primary purpose administering mortgages, hypothecs or property, with the revenues "Offering Memorandum Exemption" means the exemption from requirement provided by section 2.9 of National Instrument Registration Exemptions; (C) The Commission is of the opinion that it would not be prejudicial to to the IT IS 1 THAT, pursuant to section 20(1) than Excluded Exemption, is exempt from the following requirements of Form 45-1 conditions specified in paragraph 2 below are satisfied: Requirements for an audit the in each audit of financial statements or an operating statement, or for financial information to be audited or financial financial information financial statements: (i) Instruction B.9, (i i) Instruction (iii) Instruction D.3(b); and (iv) Instruction D.4(d)(i); Requirements to update with an audit b) Instruction B.12 if, in the case of a distribution ongoing at the time: (i) issuer's financial financial year (ii) the updates the offering memorandum to include financial statements for soon as the hypothecs, or instruments or instruments secured on of holding the same for the term from them to provide a return for its investors; prospectus 06 Prospectus public the Act, an issuer conducting a distribution of in on Offering Memorandum if all of the the following Instructions, as applicable, for an from audited financial if or statement have not audited, or audited or derived from audited its most completed not and most recently completed financial year, as approved the financial statements but in
any event no later than the 120th day following its financial year­ end; c) Instruction C.6 if, in the case of a distribution ongoing at the relevant time: (i) the financial statements for a business referred to in Instruction C.1 for the business' most recently completed financial year that ended before the acquisition date, have not been audited; and (ii) the issuer updates the offering memorandum to include financial statements for that business' most recently completed financial year that ended before the acquisition date, when they are available but in any event no later than the date 120 days following the year-end; Requirement to disclose an audit and no reservation of opinion d) Instructions D.3(c)(i) and D.3(c)(ii) if the issuer, in the offering memorandum: (i) discloses that the financial information presented has not been audited and is not derived from audited financial statements; and (ii) identifies the financial statements from which the financial information has been derived; Requirements to use GAAP for publicly accountable enterprises e) the requirement in Instruction B.1 to prepare financial statements, an operating statement, and financial information included in an offering memorandum in accordance with Canadian GAAP applicable to publicly accountable enterprises, if (i) each financial statement, operating statement and any financial information presented in the offering memorandum that has not been prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises is prepared in accordance with Canadian GAAP applicable to private enterprises, and (ii) the issuer complies with section 3.11 of National Instrument 52­ 107 Acceptable Accounting Principles and Auditing Standards, to the extent applicable, as if references in that section to "acquisition statements" instead referred to the issuer's financial statements. 2. A distribution made in reliance on the Offering Memorandum Exemption and any element of paragraph 1 above (the Particular Distribution) must satisfy all of the following conditions:
a) the aggregate maximum distributions made in all jurisdictions in reliance on this Blanket Order or a Corresponding OM Order, does not exceed $500 000; b) the aggregate acquisition cost to a purchaser of all securities of the Issuer Group distributed in the Particular Distribution or in any other distribution made in reliance on this Blanket Order or a Corresponding OM Order during the 12 months preceding the Particular Distribution , does not exceed $2 000; c) the issuer states in memorandum used in a distribution that relies on this Blanket Order or a Corresponding OM Order: "This is a risky financial information audited. They have been prepared using Canadian GAAP for private enterprises statements prepared accountable enterprises. prepared using Canadian GAAP for publicly accountable enterprises.} Particular conditions apply to this offering . When relying on those particular conditions, the issuer, issuers cannot raise more than $500,000. You may choose to invest less but when relying together with the issuers related to it, must not sell you more than $2,000 worth of securities in a 12 month period." d) the issuer states in bold font on the first page of each Form 45-106F1 Report of Exempt Distribution filed in respect of a distribution that has relied on this Blanket Order or a Corresponding OM Order: "This distribution was made under exemptions from offering memorandum form requirements provided under blanket orders in one or more jurisdictions." 3. This order ceases to have effect after 20 December 2014. BY ORDER OF THE COMMISSION amount raised by the Issuer Group, in all bold font on the face page of each offering investment. The financial statements and in this offering memorandum are not and are not comparable to financial using Canadian GAAP for publicly [Instruction : Delete if statements are related to it, on those particular conditions the issuer, Deputy Director
 You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.