The process of making an investment available in Ontario requires a prospectus or for the investment to be exempt from the prospectus requirement. Cannect Invest offers its investment under the Offering Memorandum Exemption.
An Offering Memorandum (OM) is a document that provides investors information about the company they wish to invest in. An OM includes financial statements, risk factors, key personnel, and other items of interest about the company. If the company makes a misrepresentation in an OM, the investor has a right of action against the company. In addition, investors have a two-business-day withdrawal right when they make an investment.
The Offering Memorandum Exemption permits investors to invest differing amounts depending on their financial situation. There are three main categories:
1. Accredited investors—You are an accredited investor if (i) you have net assets, alone or with a spouse, in excess of $1,000,000; or (ii) net income before taxes in excess of $200,000 (or $300,000 with a spouse) for the two previous calendar years, and a reasonable expectation of exceeding those levels in the current calendar year.
2. Eligible investors—You are an eligible investor if you aren’t an Accredited Investor and if (i) you have net assets, alone or with a spouse, in excess of $400,000; or (ii) net income before taxes in excess of $75,000 (or $125,000 with a spouse) for the two previous calendar years, and a reasonable expectation of exceeding those levels in the current calendar year.
3. Non-eligible investors—You are a non-eligible investor if you aren’t an accredited investor or an eligible investor.
Accredited investors have no investment limits.
Eligible investors can invest a maximum of $30,000, cumulatively, for all investments made subject to the OM Exemption in any twelve-month period unless they receive advice from a portfolio manager, investment dealer or exempt market dealer, in which case they can invest up to $100,000.
Non-eligible investors can invest a maximum of $10,000, cumulatively, for all investments made subject to the OM Exemption in any twelve-month period unless they receive advice from a portfolio manager, investment dealer or exempt market dealer, in which case they can invest up to $100,000.
Cannect Invest works with Meadowbank Asset Management to assess investors and ensure the appropriate investment limits for you.
When you deposit money into any Cannect Invest account, we then purchase shares in Cannect Mortgage Investment Corporation in your name at a cost of $10 per share. Shares are typically purchased twice a month from the available money you have deposited. Once we issue you your shares you are eligible to receive dividends. Dividends are paid out on a monthly basis. You can either have your dividends automatically deposited to the bank account you used to deposit to your account, or you can enroll in our dividend reinvestment program which uses your dividends to purchase additional shares.
Before investing subject to the OM Exemption, investors must complete a form highlighting the key risks associated with the investment, and are required to confirm their investor status and that they are within the applicable investment limit. Cannect Invest offers an automated, online scoring system through our relationship with Meadowbank in order to ensure you qualify as an investor.
This is a simplified summary of the Offering Memorandum Exemption and is not a substitute for legal advice. In addition, there are several other ways to qualify as an accredited investor or to make investments pursuant to the Offering Memorandum Exemption. Please see osc.gov.on.ca for more information.
