OSC takes action to increase transparency and encourage compliance in the exempt market; introduces AFS non-delivery list and focused compliance examinations
TORONTO, Oct. 8, 2025 /CNW/ - The Ontario Securities Commission (OSC) today announced recent activities to increase transparency and foster compliance in the exempt market, a segment of Canada's capital markets where securities can be sold without the protections associated with a prospectus. These activities align with our Strategic Plan that identified the ongoing growth of the private markets. We are approaching this work from two perspectives. We are enhancing awareness of our requirements and monitoring the use of the offering memorandum prospectus exemption (OM exemption) under section 2.9 of National Instrument 45-106 Prospectus Exemptions, as well as increasing transparency for retail investors who participate in the exempt market and may be exposed to heightened investment risks such as the risk of loss, limited liquidity, and lack of information.
"The aim is to advance investor protection for all investors by increasing transparency about the business activities of non-reporting issuers raising capital in the exempt market using the OM exemption and limiting the distribution of non-compliant non-reporting issuers," said Sonny Randhawa, Executive Vice President, Regulatory Operations at the OSC. "Exempt market does not mean unregulated market. Within Regulatory Operations, the OSC's Corporate Finance and Registration, Investigations and Examinations divisions are working in tandem to encourage compliance with regulatory requirements by both issuers and dealers in the exempt market to support investor protection."
As part of these efforts, the OSC's Corporate Finance division is introducing an AFS non-delivery list, a list of non-reporting issuers that have relied on the OM exemption in Ontario but have not delivered annual financial statements to the OSC. Delivery of financial statements to the OSC is a condition of the OM exemption. Publishing this list on the OSC website provides greater transparency about the exempt market by notifying investors and other market participants of companies that have not delivered their annual financial statements to the OSC.
The OSC's Registration, Investigations and Examinations division (RIE) will be examining exempt market dealers (EMDs) involved in the distribution of certain non-reporting issuers that failed to deliver their annual financial statements to the OSC. RIE's examinations will consider the know-your-product practices of registrants when distributing securities of these issuers. As part of its ongoing work to oversee EMDs, RIE recently identified significant compliance deficiencies that led to the suspension of an EMD and its chief compliance officer.
The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair, efficient and competitive capital markets and confidence in the capital markets, to foster capital formation, and to contribute to the stability of the financial system and the reduction of systemic risk. Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at https://www.osc.ca.
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SOURCE Ontario Securities Commission