Canadian Securities Administrators Propose Amendments to the Offering Memorandum Exemption for Real Estate Offerings

The Canadian Securities Administrators (CSA) have published for comment proposed changes to the offering memorandum prospectus exemption. The changes are reflected in proposed amendments to National Instrument 45-106 Prospectus Exemptions (NI 45-106), as well as proposed changes to Companion Policy 45-106CP Prospectus Exemptions.

The proposed amendments set out new disclosure requirements for issuers that are engaged in “real estate activities” or issuers that are “collective investment vehicles”. These include a new requirement for issuers with real estate activities to provide an independent appraisal of the real property, if it discloses a value for the real property other than in its financial statements, will use a material amount of the proceeds to acquire an interest in real property, or acquire an interest in real property from a related party. It is proposed that issuers that are collective investment vehicles will need to provide better disclosure to investors about the issuer’s investment decision-making process and the composition and performance of the issuer’s portfolio.