Set out below is an overview of the “small offers” exclusion that permits certain small personal offers of debt and equity securities.
It is important to note that even if an offer is made in reliance on an exclusion, the FMCA may still impose short-form disclosure, warning statements or other requirements on the offeror.
Please click here to see further information about the FMCA disclosure requirements and other FMCA disclosure exclusions.
Small offers exclusion
Disclosure under the FMCA is not required for certain small personal offers of debt or equity securities. The main purpose of this exclusion is to promote small and medium-sized business growth by permitting these entities to make offers without prescribed disclosure. The offer must comply with certain caps, and the offer cannot be advertised to the general public. The ‘small offers’ exclusion will be of particular interest to companies wanting to obtain investment from high income earners, angel investors and others who have shown an interest in investing in the company.
A personal offer of financial products does not require a disclosure under the FMCA if:
What is a 'personal offer'?
A personal offer is an offer to issue or sell financial products made to, and only accepted by, a person who either:
The FMCA sets out certain relationships that tend toward a personal offer, including professional connections, where the issuer and investor have had previous contract, and extends to angel investors.
The flow chart below sets out the FMCA requirements for small offers.
Offerors who rely on a small offers exclusion will still need to be aware of the following obligations:
Small offers summary flow chart
Disclaimer: This article is a general summary of complex laws and regulations that contain severe sanctions for breach and is not intended as legal advice. Specific legal advice should be obtained in relation to proposed marketing, offering or selling of financial products.
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Darryl King, PARTNER
Claire Godber, SENIOR
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