The “Private Market” or “Exempt Market” refers to companies raising capital without issuing a prospectus. Securities legislation allows for capital to be raised without a prospectus, provided an exemption from the prospectus use is available. Common prospectus exemptions used are issuing an offering memorandum or selling to accredited investors. Private companies that require capital from investors are not publicly traded but still need investors to achieve the goals for their companies and projects and want to do so without going public.

In Canada, issuing securities by way of filing a prospectus significantly increases the cost of raising capital so many private companies choose to raise capital using prospectus exemptions.

Investing in the “Private Market” or “Exempt Market” offers investors an opportunity to diversify their investment portfolios into private equity that is not offered through most traditional financial institutions.

The securities commissions/ regulatory authorities in each province and territory regulate the public and private capital markets in Canada through securities legislation, regulations, rules and national or multilateral instruments. Security law administration and enforcement is overseen by security regulators that have regulatory oversight of issuers of exempt products and market participants – dealers and dealing representatives.

CVC, as an exempt market dealer, is overseen by the Alberta Securities Commission as our principal regulator and we are also registered with the British Columbia Securities Commission for our British Columbia activities. Each of our Dealing Representatives is registered with the regulator of the province in which they reside and may also be registered in the other provinces in which CVC is registered. You can find our registration and our Dealing Representatives information at the Canadian Securities Administrators website.

(NOTE: CVC™ Market Point Inc. is not associated with or specifically endorsed or recommended by the CSA or its Members and that although the information contained in their website is believed to be accurate, complete, and up to date when posted, the CSA or its Members cannot guarantee that it is or will remain accurate, complete or current)

Please see these other sources for further information

The term Exempt Market Dealer (usually shortened to “EMD”) defines a company licensed by securities regulators to trade in or underwrite investment securities that have not been qualified by a prospectus; instead, the investments are exempt from the prospectus requirement. Often referred to as ‘private capital’, these investments are often not publicly traded like other stocks and securities.

In 2009, the Canadian Securities Administrator enacted National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (“NI 31-103”), creating an investment dealer category called an Exempt Market Dealer (EMD), which would be allowed to trade in prospectus-exempt securities. Under NI 31-103, an EMD must be registered in the province or provinces where they perform dealing activities. Further, NI 31-103 set out fundamental obligations registrants must adhere to including know their investments (often shortened to KYP – Know Your Product), know their clients (KYC – Know Your Clients), suitability and maintain appropriate industry knowledge and proficiencies. These fundamental obligations of registrants include the activities of the EMD and the EMD’s Dealing Representatives. EMDs must also address complaints in a timely fashion and have sufficient insurance.

In addition, under the Securities Act, CVC and our Dealing Representatives must deal fairly, honestly, and in good faith with their clients. It is important that investors ensure that both the firm and the Dealing Representative they work with regarding the purchase of private securities is appropriately registered. You can confirm CVC and your Dealing Representative’s registration on the Canadian Securities Administrators website.

(NOTE: CVC™ Market Point Inc. is not associated with or specifically endorsed or recommended by the CSA or its Members and that although the information contained in their website is believed to be accurate, complete, and up to date when posted, the CSA or its Members cannot guarantee that it is or will remain accurate, complete or current)

For CVC, we are registered in Alberta and British Columbia as an Exempt Market Dealer and all of our Dealing Representatives are accordingly registered in their respective jurisdictions.

The following sources can provide further information:

Local Securities Authorities – some of the relevant authorities

(NOTE: CVC™ Market Point Inc. is not associated with or specifically endorsed or recommended by the CSA or its Members and that although the information contained in their website is believed to be accurate, complete, and up to date when posted, the CSA or its Members cannot guarantee that it is or will remain accurate, complete or current)

Industry Associations

The exempt market provides investors the unique ability to invest directly into privately held companies typically composed of small and medium size enterprises (“SMEs”). These SMEs, those firms with less than 100 employees, represent over 97% of businesses within Canada*. Without the private market, the opportunity to invest in SMEs would not otherwise be available for the average investor.

Even though private market investments carry higher risks and lack liquidity – meaning they are subject to resale restrictions and are not readily convertible to cash – they may offer investors an opportunity to diversify their investment portfolios.

Although private market investments are not suitable for everyone and are not necessarily more profitable than traditional investments, there may be good reasons for including them in your investment portfolio. Our team of Dealing Representatives is available to help you understand the investments, explain the risks and assess whether a private investment is suitable for your needs and goals.

*Source: http://www.ic.gc.ca/eic/site/061.nsf/eng/h_03018.html#point1-1

Many investors are eligible to invest in the private market or exempt market, subject to complying with applicable investment limits and/or a certain level of annual income or assets. Our team of Dealing Representatives is available to explain the requirements to you and assess whether you qualify to invest in the private market.

All investments have associated risks which investors should be aware of. We believe it is of the utmost importance that investors have a clear understanding of the risks and any conflicts of interest associated with their investments.

Each investment has its own risks which will be explained to you by our team of Dealing Representatives. Investment products sold in the exempt market are generally considered high risk because of some of the following factors:

  • Private issuers are not publicly traded on a stock exchange and there may be other limitations that restrict you from liquidating your investment at will, meaning it is illiquid;
  • Offering Memorandums and other offering documentation are not reviewed by securities regulators;
  • A Prospectus is not prepared by the issuer, meaning you will not receive the benefits of having the document reviewed by securities regulators;
  • Exempt market investments are not guaranteed or insured;
  • Ongoing disclosure obligations are lower or non-existent for private companies, compared to publicly listed companies; and
  • There are generally fewer governance standards for private companies compared to publicly listed companies.

An Offering Memorandum (“OM”) is a type of disclosure document that may be used in investing in private market investments. Set out within this document is prescribed standard information regarding the company seeking your investment. Some of these sections include ‘Use of Available Funds’, ‘Business of the Corporation’, ‘Capital Structure’, ‘Description of Securities Offered’ and within the section called ‘Risk Factors’ is a listing of applicable risks of the investment. Risks outlined in the OM are there to help you learn and understand the risks that may impact the investment’s performance or ability to perform.

You are not alone in trying to understand the investment’s risks. CVC’s Dealing Representatives will review the risks for the investments with you and assess the suitability of the product given your specific risk tolerance and investment objectives. The Dealing Representative will answer any questions you have along the way. In the end, we want you to be an informed investor.


Alberta

Calgary

1800, 555 - 4th Avenue S.W.
Calgary, AB T2P 3E7

tel 403-538-5837
fax 403-262-9520
toll free 1-877-847-6797

Edmonton

Suite 904, 10050 - 112 Street
Edmonton, AB T5K 2J1

tel 1-888-739-4793



British Columbia

Vancouver & Lower Mainland

Suite 710, 1055 West Georgia Street
PO BOX 11166
Vancouver, BC V6E 3R5

tel 604-638-2631
toll free 1-877-847-6797

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