Last month, an article on this blog summarized the recent amendments to the accredited investor exemption which came into effect May 5, 2015. Ordinarily a company cannot issue securities unless it has filed a prospectus. In certain circumstances, such as those described in the accredited investor exemption, a company can sidestep this requirement.
This exemption assumes that accredited investors have a certain degree of financial literacy in order to assess an investment without a prospectus and that, if the company’s situation takes a turn for the worse, the investor’s future financial prospects will not be devastated.
One of the aforementioned amendments requires a corporation to acquire a Risk Acknowledgment Form from investors before distributing securities.
Sara Josselyn – Norton Rose Fulbright –
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