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OSC clarifies who is “the public”?

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OSC clarifies who is “the public”? Aquilina Law September 5, 2021

OSC clarifies who is “the public”?

In the recent Ontario Securities Commission (OSC) decision, In the Matter of Future Solar Development Inc. (Future Solar), the question of whether a wealthy group of Chinese investors were considered to be members of the public was addressed.

In Ontario, every person or company that distributes previously unissued securities must provide the investors with a prospectus, a disclosure document containing information believed to be necessary to make an informed investment decision. To avoid hindering businesses from raising money efficiently, the securities laws provide a series of exemptions from the prospectus requirement.

In the Future Solar decision, the Ontario issuing company sought to rely on the prospectus exemption for distribution by private issuers to persons that are not “the public”. The panel concluded that a group of wealthy Chinese investors seeking to immigrate and invest in Ontario were not “the public” at large. In their view, a network of people known to the immigration consultants as desirous of investing abroad and emigrating from a foreign country fell within a “defined category”. As such, these investors were not, in the words of the OSC, “total strangers”.

The question of who is a member of the public for securities law purposes has been a long standing question, and while this recent OSC decision certainly does not settle the question, the OSC has indicated that certain persons unrelated to the issuer will not be considered part of the public if they are part of a group that can be defined.

This article is for informational purposes only and does not constitute legal advice. If you wish to seek legal advice, contact Martin Aquilina today.

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