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CSA Provides Guidance for Preparing and Filing an Offering Memorandum Under NI 45-106

July 23, 2012  
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By:     Brian Koscak, EMDA Chairman and Partner, Cassels Brock & Blackwell LLP
Afzal Hasan, Articling Student, Cassels Brock & Blackwell LLP

Capital markets participants often struggle with trying to comply with the form requirements for preparing and fi ling an offering memorandum (OM) in connection with the offering memorandum exemption (the OM Exemption) under section 2.9 of National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106). Although there are prescribed form requirements (the Forms), one for qualifying issuers (1) and one for non-qualifying issuers, it appears issuers are struggling to get it right.(2)

The Saskatchewan Financial Services Commission (the SFSC) has previously issued a staff notice commenting on its review of OMs in SFSC Staff Notice 45-704 – Review of Offering Memorandums under NI 45-106 Prospectus and Registration Exemptions. The SFSC found material disclosure deficiencies in all OMs that were reviewed, noting that "[i]n general, the OMs were poorly prepared and did not provide the disclosure required” (3) by the Forms.

Based on a review of the number of cease trade orders that have been issued in British Columbia and Alberta for materially deficient OMs, the quality of OMs prepared in other provinces does not seem to be substantially better.

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