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ANSWERS FALSE If the new amateur hockey club is organized only for educational, benevolent, fraternal, charitable, religious or recreational purposes and not for profit, then Ted and William may sell securities in the club to investors, provided the club meets the definition of a "not-for-profit" issuer. As long as the club is not established for purposes of earning a profit and no part of any net earnings benefit any of its security holders, then the pro- spectus exemption in Section 2.38 of National Instrument 45-106 (NI 45-106) will be available. However, if Ted and William utilize the prospectus exemption in Section 2.38 of NI 45-106, they may not pay a commission to anyone in connection with the sale of securities of the club. FALSE While there is a dealer registration exemption for a "not- for-profit" issuer in Section 3.38 of NI 45-106, it applies only if no commission is paid in connection with the sale of the security. Assuming that Anna's agreement provides she gets paid for finding investors, the registration exemption would not apply and Anna would need to be registered before selling securities on behalf of the club. ONLY (E) IS INCORRECT All of the other listed prospectus exemptions apply to new investors, provided they are fully complied with by the club. In a) (accredited investor), each investor must complete a form to confirm he or she meets the definition of accredited investor under Section 2.3 of NI 45-106. In b) (minimum invest- ment amount), the investor must purchase the shares as prin- cipal at a cost of not less than $150,000 paid in cash when the shares are issued. In c), the private issuer exemption in Section 2.4 of NI 45-106 is available, provided constating documents of the club restrict share transfers. In addition, the number of shareholders must not exceed 50, excluding employees and former employees of the club. Further, share recipients must fall within the list of eligible persons set out in subsection 2.4(2) of NI 45-106 to qualify as purchasers of shares of a private issuer. In d), Ted and William may issue shares to employees of the club under Section 2.24 of NI 45-106, provided the share purchases are voluntary. Finally, e) is not available, as the club is offering its securities on a for-profit basis, eliminating the not-for-profit issuer exemption in Section 2.38 of NI 45-106. There is a registration exemption available for each of the prospectus exemptions in a) to d), provided the club itself is undertaking distribution of the shares. FALSE While the subject matter of the business is real estate, Ted and William are selling shares in the company that holds the condominium business. Since the shares of the company are considered securities under the act, Ted and William must comply with the act in order to sell the shares. This will involve locating an exemption from both the prospectus and registration requirements under the act in order to offer the shares without a prospectus through a registered dealer. (D) Each of the methods described in a), b), and c) is avail- able to Ted and William, as they are in compliance with the registration requirements or applicable registration exemp- tions under the act for purposes of selling securities. YOUR RANKING? One or fewer correct: Might be time to brush up. Two or three correct: Not bad, but some further work needed. Four correct: Very well done, but not perfect. Five correct: Impressive. Recruiting? Post your position on GREAT RATES. GREAT REACH. GREAT RESULTS. Contact Sandy Shutt at sshutt@clbmedia.ca for details. 16 • OCTOBER 2010 JobsInLaw_IH_Aug_10.indd 1 INHOUSE 6/28/10 12:49:40 PM 1 2 3 4 5