Archives for March2012

In the community March 2012

This month, Cobalt’s affiliated counsel:

  • attended the Prospectors & Developers Association of Canada’s International Convention Trade Show & Investors Exchange in Toronto and related receptions
  • attended the Montreal New Tech Meetup
  • judged the Elevator Pitch round at the TieQuest annual business venture competition in Toronto
  • participated as an Idea Consultation judge at the Ryerson University Ditigal Media Zone
  • hosted the Multiplicity Accelerator and Richard Ivey School of Business Idea Garden event in Toronto
  • attended Multiplicity Accelerator’s What’s Cool Breakfast on E-payment in Toronto
  • attended the Grande Ouverture Google Québec
  • attended Young Entrepreneurs Night, hosted by the Globe and Mail in Toronto
  • attended the Wine Reception at the National Business and Technology Conference at the Metro Toronto Convention Centre
  • attended The $25,000 Slaight Communications Business Plan Competition at the Ted Rogers School of Management at Ryerson University
  • attended Multiplicity Accelerator’s What’s Cool Breakfast on Online Learning in Toronto; and
  • attended That’ll Never Work, hosted by Ivey and profiling some of Canada’s most successful entrepreneurs
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Background on investor disclosure requirements

Canadian companies currently are required to provide prospectus-level disclosure (very technical and very expensive in terms of legal fees from the perspective of a budding company).  For Canadian companies who wish to offer shares to investors, there is a requirement of a minimum level of investor protection information disclosure.  Certain disclosure exemptions apply (among others):

(a) company founders;

(b) company employees;

(c) family members of founders;

(d) “sophisticated” or accredited (high net worth investors who presumably have the contacts and resources to evaluate investment opportunities);

(e) close business associates; and

(f) if a minimum threshold of information is provided in an offering memorandum document (this exemption is not available in all provinces).

A complete list of exemptions can be found here:  http://bit.ly/N1V1pQ (scroll down within the document to part 2).

Where an exemption does not exist, a high level of investor disclosure, both initially and ongoing (including audited financial reports, an explanation of risk factors, and information on the business) is required in the form of a prospectus in order to raise financing from complete strangers.

In the preceding list, the further the offer is from “(a)” i.e. an established relationship with the founder and the closer the offer is to “(f)”, i.e. a complete stranger, the more information is required.

However, a complete stranger who is an accredited (or sophisticated) investor in the eyes of the securities regulators (item (“d”), above) will not require comprehensive investor disclosure if he/she or such investor passes the required threshold for investing.  This label applies to (among others) banks, pension funds and, relevantly, individuals with (1) an annual income of at least $200,000 each year for the past two years ($300,000 with his or her spouse, if married) and have the expectation to make the same amount this year; or (2) have financial assets exceeding $1 million (excluding primary residence); or (3) have net assets of at least $5 million (including net value of primary residence).

This blog is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at your own risk. The law may have changed since the publication of this article. The writer is licensed to practise law in Ontario and not in any other jurisdiction.

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Cobalt’s Chairman in the news

Cobalt’s Chairman, Richard McLaren, was mentioned in an article in the publication Inside The Games. 

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Cobalt sponsors Ladies Learning Code

Cobalt would like to announce its sponsorship of Ladies Learning Code:

http://ladieslearningcode.com/sponsors/

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In the community February 2012

This month, Cobalt’s affiliated counsel:

  • attended the American Bar Association Small Firm Caucus in New Orleans
  • mentored at the Montreal Startup Weekend
  • attended the Montreal NewTech Demos
  • organized #MTLStartupTalent’s second event attended by 25+ startups and 200+ talented developers and entrepreneurs
  • attended a GrowLab event in Montreal
  • attended Multiplicity Accelerator’s What’s Cool Breakfast in Toronto
  • attended OCAD’s Mobile Experience Innovation Centre’s Fads, Trends, Drivers event in Toronto
  • organized Hacking Health, a hackathon attended by 160 hackers and health professionals in Montreal and covered on the front page of the Globe and Mail 
  • attended Ivey’s ‘Taking it to the Next Level’ Entrepreneurial event in Toronto; and
  • attended Multiplicity Accelerator’s What’s Cool Breakfast on E-commerce in Toronto

This month, Cobalt also announced its sponsorship of LawTechCamp, a widely attended event last year that will be taking place in May this year: http://lawtechcamp.com/.

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