Under this exemption, any qualified individual may purchase securities from any issuer, provided the purchaser satisfies the criteria in 2.3 of 45-106 and within the definition of an Accredited Investor provided in 1.1 of 45-106 and 73.3(2), for Ontario investors. Qualifications for this exemption include but are not exclusive to:
earned a net income before taxes exceeding $200,000 (or $300,000 combined income with spouse) in each of the two most recent years and who reasonably expects to exceed that net income in the current year;
an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $1 000 000 (In calculating an individual's financial assets, any outstanding loans incurred to acquire those assets must be deducted.);
an individual who beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $5,000,000; or
a person, other than an individual or investment fund, that has net assets of at least $5 000 000 as shown on its most recently prepared financial statements,
(Ontario) the person distributing the security obtains from the individual a signed risk acknowledgement in the required form at the same time or before that individual signs the agreement to purchase the security.
For a complete list of qualifications for the Accredited investor exemption, please see 1.1 and 2.3 of 45-106 and 73.3(2) of the Securities Act (Ontario).
Alternative Assets include assets you own besides public securities, mutual funds and private securities. These may include commodities (gold and silver), Art & Collectibles or Crypto-currencies, etc.
Borrowed funds may include loans, lines of credit or credit cards.
Using borrowed money to finance the purchase of securities involves greater risk than a purchase using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines.
SMV Capital Markets' 'coming soon' feature is presented to prospective investors through the platform to assist SMV Capital Markets and an issuer gauge interest within a possible offering. No money or other consideration is being solicited at this time in connection with a proposed or possible offering, and if sent in to SMV Capital Markets or the issuer it will not be accepted. No offer to buy securities of an issuer can be accepted and no part of the purchase price can be received until an issuer is approved for launch on the SMV Capital Markets platform and the offering documents for an issuance are made available for qualified individuals only. Any such offer to buy securities may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance is given after the qualification date. Any indications of interest in an issuer's offering submitted through the 'coming soon' feature involves no obligation or commitment of any kind.
Concentration risk is the risk that an investor will suffer from lack of diversification, investing too heavily in one industry, one geographic area or one type of security.
A registered dealer or advisor is an individual approved under Securities law to sell securities and/or advise their clients on the suitability of a specific investment.
If you choose to invest in companies of the type displayed on SMV Capital Markets , such investments should only be made as part of a well-diversified portfolio. This means that you should invest only a relatively small portion of your investible capital in such businesses, and the majority of your investible capital should be invested in safer, more liquid assets. It also means that you should spread your investment between multiple companies rather than investing a larger amount in just a few.
An eligible investor is defined as but is not exclusive to:
(a) a person whose
(i) net assets, alone or with a spouse, in the case of an individual, exceed $400 000,
(ii) net income before taxes exceeded $75 000 in each of the 2 most recent calendar years and who reasonably expects to exceed that income level in the current calendar year, or
(iii) net income before taxes, alone or with a spouse, in the case of an individual, exceeded $125 000 in each of the 2 most recent calendar years and who reasonably expects to exceed that income level in the current calendar year,
For a full description of this term please see 1.1 of 45-106.
Exempt market securities are securities that are offered by companies (Issuers) using exemptions from producing and filing a Prospectus.
Exempt market securities are typically illiquid securities of private, non-reporting companies that cannot easily be sold or exchanged for cash and where there is currently no secondary market in which to sell these securities.
Under this exemption, a registrant or issuer may sell securities in any amount to, qualified investors only, without providing any disclosure to the following individuals:
• a director, executive officer or control person of the issuer
• a family member (spouse, parent, grandparent, brother, sister or child) of a director, executive officer or control person of the issuer
• a close personal friend or close business associate of a director, executive officer or control person of the issuer.
A close personal friend is someone who has known the director, executive officer, or control person of the issuer for a sufficient period of time to be able to assess that person's capabilities and trustworthiness. Someone is not a close personal friend simply because:
• they belong to the same organization, association or religious group as the director
• they are a client or former client of a registrant or former registrant
• they are connected through some form of social media, such as Facebook, Twitter or LinkedIn
A close business associate is someone who has had sufficient prior business dealings with the director, executive officer or control person of the issuer, to be able to assess that person's capabilities and trustworthiness. Someone who is introduced to the executive officer, or solicited by the executive officer to purchase securities, is not a close business associate. He or she is a member of the public.
For a complete reading of the FF&BA exemption by jurisdiction please see 2.5 and 2.6 (Saskatchewan) and 2.6.1 (Ontario) of 45-106.
Financial assets may include cash and liquid securities (publicly traded securities), cash, a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation; less any liabilities, including loans, lines of credit and credit cards or illiquid securities (exempt market securities) against these assets.
An income investment aims to provide investors with earnings from dividends distributed by a company or interest earned on the purchase of a bond. These earnings may not be guaranteed.
A growth oriented investment aims to grow an investment by a multiple (capital appreciation) of the original sum invested during the duration an investment is held. There is typically higher risk associated with growth-oriented investments.
Illiquid securities are securities that cannot easily be sold or exchanged for cash or cash equivalent. Exempt market securities are typically illiquid as they are not traded on a public exchange (such as the TSX or TSX Ventures exchanges)
An income investment provides investors with earnings from dividends distributed by a company or interest earned on the purchase of a bond. A growth oriented investment aims to grow a sum by a multiple equal to or more than the original sum invested during the duration an investment is held.
An insider is a director, executive officer or a person that beneficially owns more than 10% of an issuer's voting shares.
In Ontario, the following classes of persons are designated as insiders:
(a) a director or an officer of an issuer;
(b) a director or an officer of a person that is an insider or a subsidiary of an issuer;
(c) a person that has
(i) beneficial ownership of, or control or direction over, directly or indirectly, securities of an issuer carrying more than 10% of the voting rights attached to all the issuer’s outstanding voting securities, excluding, for the purpose of the calculation of the percentage held, any securities held by the person as underwriter in the course of a distribution, or
(ii) a combination of beneficial ownership of, and control or direction over, directly or indirectly, securities of an issuer carrying more than 10% of the voting rights attached to all the issuer’s outstanding voting securities, excluding, for the purpose of the calculation of the percentage held, any securities held by the person as underwriter in the course of a distribution;
(d) an issuer that has purchased, redeemed or otherwise acquired a security of its own issue, for so long as it continues to hold that security.
Investment horizon is the total length of time that an investor expects to hold a security or a portfolio. The investment horizon determines the investor's income needs and desired risk exposure, which aid in security selection. Establishing an investment horizon should be one of the first steps to creating an investment portfolio. The investment horizon for exempt market securities offered on SMV Capital Markets is generally longer.
Investment knowledge is an indicator of your level of understanding of how investment products work, the type of product you may invest in and your understanding of the risks associated with investing in financial products.
(1) A registrant must take reasonable steps to
(a) establish the identity of a client and, if the registrant has cause for concern, make reasonable inquiries as to the reputation of the client,
(b) establish whether the client is an insider of a reporting issuer or any other issuer whose securities are publicly traded,
(c) ensure that it has sufficient information regarding all of the following to enable it to meet its obligations under section 13.3 [suitability] or, if applicable, the suitability requirement imposed by an SRO (Self Regulating Organization):
(i) the client’s investment needs and objectives;
(ii) the client’s financial circumstances;
(iii) the client’s risk tolerance, and
(d) establish the creditworthiness of the client if the registered firm is financing the client’s acquisition of a security.
For a full reading of this legislation please see section 13.2 of 31-103.
As a Registered Dealer, SMV Capital Markets is required to understand the structure and features of each investment product we recommend and to explain the particulars of an investment product to clients. Among other items, this includes costs, risks and eligibility requirements. FFS undertakes best practices in collecting due diligence information on the issuers and the securities it considers to make available for purchase by qualified investors on the platform. Not all issuers which solicit FFS to sell their securities are accepted to enter into an agreement with FFS to sell their securities. If FFS and an issuer enter into an agreement, acceptance of an issuer and their securities on the platform is determined by multiple considerations during a due diligence review. If an issuer is not approved by FFS’s Investment Review Committee, they are given an opportunity to improve their offering in the interest of potential investors before an offering is made available on the platform. FFS is of the opinion that not all investments are suitable for all investors and it undertakes best efforts to provide products which may be suitable for different investors.
For a full reading of legislation regarding KYP, please see 33-103, 31-103CP and CSA staff notice 31-336 and CSA Staff Notice 33-315.
Net Worth may include your financial assets, alternative assets, plus any real estate you own (less any mortgages).
In accordance with Canadian securities laws the Offering Memorandum Exemption (the “OM Exemption”) allows companies to raise capital from qualified investors in Canada.
Publicly traded securities can be sold on a stock exchange (such as the TSX, the NASDAQ Canada or the Montreal Exchange). Publicly traded companies are reporting issuers and subject to continuous disclosure of business activities under Canadian securities law.
The risk-return trade-off is the principle that potential return rises with an increase in risk. Low levels of uncertainty or risk are associated with low potential returns, whereas high levels of uncertainty or risk are associated with high potential returns. According to the risk-return trade-off, invested money can render higher profits only if the investor is willing to accept the possibility of losses. Therefore, a higher risk investment means there is a higher risk that you may lose your entire investment. You can balance risk and return of your investment portfolio by diversifying your investments. Learn more about Diversification.
Risk tolerance is the degree of variability in investment returns that an investor is willing to withstand. An investor with high risk tolerance accepts that they may lose their entire investment for a specific investment. An investor with low risk tolerance is less accepting of losing their entire investment with a specific investment. Exempt market securities are risky investments and you could lose all the money you invest in such securities.
Secured debt is debt backed or secured by collateral to reduce the risk associated with lending, such as a mortgage or a loan backed by a personal guarantee.
(1) A registrant ( SMV Capital Markets ) must take reasonable steps to ensure that, before it makes a recommendation to or accepts an instruction from a client (investor) to buy or sell a security, or makes a purchase or sale of a security for a client’s managed account, the purchase or sale is suitable for the client. Some of the areas reviewed in a suitability assessment may include, but are not exclusive to:
b) Time horizon.
c) Risk tolerance level.
d) Financial circumstances.
e) Portfolio concentration.
(2) If a client instructs a registrant to buy, sell or hold a security and in the registrant’s reasonable opinion following the instruction would not be suitable for the client, the registrant must inform the client of the registrant’s opinion and must not buy or sell the security unless the client instructs the registrant to proceed nonetheless. Some examples of when an investment is determined to be unsuitable for a client may include, but are not exclusive to:
a) A client's assets for private market securities exceeds 10% of a total portfolio.
b) If an investment in a security represents a disproportionate amount of a client's annual income.
c) A client indicates they wish to utilize borrowed funds for the investment but does not appear have income to support this investing approach.
For a full reading of this legislation please see section 13.3 of 31-103
Time horizon is the length of time over which an investment is made or held before it is liquidated. Time horizons for exempt market securities are generally held for an extended period of time.
Unsecured debt are loans that are not backed by an underlying asset. Unsecured debt includes credit card debt and other types of loans or credit that were extended without a collateral requirement.
SMV Capital Markets is an Exempt Market Dealer (EMD) under Canadian securities legislation and provides advice about the suitability of all investment opportunities.
These investment opportunities have risks and may result in the loss of all or most of your investment. You may receive limited ongoing information about a company or an investment made through SMV Capital Markets.