In an exempt market a business has exemption from the need to develop a prospectus which is normally required if a business wants to raise capital from the market. Exempt market securities are becoming popular with every passing day and as such are attracting attention from prospective investors who are always on the lookout for better investment opportunities.
But before taking any investment decision in haste it is necessary to perform investment due diligence so as to be sure about making the right assessment of the market and the company. Accordingly, we will go through some necessary advice which will help you in making the right decision.
Due Diligence Steps before Investing in Exempt Market
Taking Help of Dealing Representatives or Registrant
You need to be aware that registrants are normally registered with securities commission of your province and can sell investments.
It is also worth mentioning here that most of the commonly occurring investment frauds are in situations where investors do not take assistance of registrants or dealing representatives. Thus the best thing is to utilize services of a registrant in your region.
Be More Proactive
Usually the dealing representatives or registrants conduct suitability verification for all their clients before suggesting anything. This type of verification consists of tasks such as analyzing details of situation investor is in and the goals investor has.
After the analysis, it becomes a lot easier for the registrant to find right investment match that would be most appropriate for the investor. Accordingly, it will be in your best interest to share as much information as possible with the registrant to avail most appropriate recommendations.
Know whether you will qualify
It is regarded as one of the first steps in the investment process. In this step your financial advisor will be analyzing details to know whether there are any issues for you in making an investment in exempt market products.
Investment due diligence will be quite necessary here since rules tend to vary according to the province you are in as for example, anyone can invest in BC while in Ontario investment in possible for millionaires only.
Get Answers for all Your Queries
Whether you are investing in exempt market or anywhere else, it will be necessary to put your queries as well as enhance your knowledge level. It will be your responsibility to conduct an investment due diligence exercise, get answers to all questions that crop up and upgrade your knowledge about exempt markets.
Many legal bindings and taxation laws tend to make investment in exempt market a complicated one and only right knowledge will help you make right decisions.
If you are just starting up in exempt market then it will be a wise decision to start with a small investment at first to check how well things go. The lack of good secondary market and lack of liquidity provisions would also mean that you will have to see how well your small investment works before making any substantial investment.
A Final Note
To conclude it can be said that if you are alert and do proper analysis of the market then investment in exempt market can certainly be quite profitable.