The Globe and Mail reports in its Friday edition that "exempt market" rules were supposed to make it easier for small companies and retail investors to connect. The Globe's David Milstead writes, however, that big companies and sophisticated investors are taking up the bulk of the market. That is the conclusion from an Ontario Securities Commission report on the how the rule change has worked. Raising money had relied on exemptions from the full, lengthy disclosures found in a traditional offering prospectus. The total amount invested in 2017 was $91.6-billion, nearly triple the 2010 level and 27 per cent higher than 2016. Yet institutional investors such as pension funds and asset managers are responsible for 98 per cent of that capital, the OSC says, with individuals responsible for just 2 per cent.
Small companies, which the OSC defined as those with less than $5-million in assets and raising less than $1-million, accounted for less than 1 per cent of the total capital raised, the OSC says. Twenty-two thousand individual investors participated, spreading $2.2-billion in capital among 1,700 companies. The OSC also found that there was no use of the crowdfunding prospectus exemption, a January, 2016, policy.
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