Minimum Amount
Your company can sell securities to a purchaser who is willing to buy at least $150,000 worth of your company’s securities and pays cash.
iii) Accredited Investors
Your company can also sell securities to individuals or companies that meet the definition of accredited investor. This includes
- an individual who owns financial assets, such as cash and securities, of $1,000,000. Note: a house is not a financial asset,
- an individual who has net assets of $5,000,000,
- an individual whose net income exceeds $200,000 in each of the two most recent years, and
- a company with net assets of $5,000,000.
iv) Offering Memorandum
Under this exemption, you can sell securities to anyone. To do this, you must prepare a disclosure document called an “offering memorandum”. An offering memorandum includes information about
- the company and its business,
- how the proceeds will be used,
- the associated risks,
- the rights available to purchasers, and
- the financial statements of the business.
Note: You are required to file this disclosure document with the Commission within 10 days of the first sale.
Before selling any securities under this exemption, you must obtain a signed risk acknowledgement in the required form from each investor. In this document, the purchaser acknowledges the risk of investing in your company, the limited ability to sell, and acknowledges that the purchaser could lose all the money invested.
If your company uses this exemption, the money raised must be held in trust for two days, so that it is available to return to a purchaser that exercises the right to cancel.
For More Information
As you will see from this article, seeking investment for your business is about much more than perfecting your pitch and accepting money. There are many legal issues to consider. It is therefore advisable to consult a lawyer before looking for investment to understand all the requirements.
You can also contact the BC Securities Commission at 1-800-373-6393, email to inquiries@bcsc.bc.ca, or go on line and check out the BCSC website.
