As part of an ongoing effort to encourage capital raising, and to dismantle inter-provincial regulatory barriers, a collection of Canadian securities regulators is proposing a harmonized new prospectus exemption that would enable companies to raise funding from investors that are knowledgeable, but don’t meet the financial thresholds for the accredited investor exemption.
Regulators from most of the provinces (excluding British Columbia and Quebec) and the territories are seeking feedback on a proposed new harmonized exemption for investors that self-certify that they meet certain qualifications — based on expertise or experience (such as financial planner or financial advisor credentials, or holding various industry designations) — to participate in exempt financings.
The purpose of the proposed new exemption is to expand the sources of potential capital for issuers, while also increasing the investment opportunities for investors that don’t qualify as accredited investors, but do have certain investment savvy.
Additionally, in a notice detailing the proposed exemption, regulators said that the proposal aims to support provincial governments that are “actively working to strengthen, adapt and diversify their provincial economies.”
Investors that rely on the proposed new exemption — which would allow investments of up to $50,000 per year — would also have to sign a risk acknowledgement.
“Our aim is to strike the right balance by protecting investors without imposing unnecessary burdens on growing businesses,” the notice said.
“One of the goals of the [proposal] is to allow self-certified investors to invest alongside accredited investors and to help facilitate the growth of the angel investor ecosystem,” it added.
Already, a number of provinces have introduced similar self-certified investor exemptions, which would be revoked if the harmonized exemption is adopted — reducing regulatory burden and facilitating investment across the provinces.
“Local exemptions for self-certified investors have been well-received by both market participants and investors, which has led to the proposal to create a harmonized exemption,” said Stan Magidson, chair of the Canadian Securities Administrators (CSA) and chair and CEO of the Alberta Securities Commission (ASC).
“The proposed exemption is designed to balance investor protection with greater flexibility for businesses pursuing investment and seeks to support capital formation and innovation across Canada,” he added.
The proposal also includes a proposed amendment to ensure that issuers won’t lose their private issuer status by relying on the exemption — a concern that some issuers have expressed with the existing local exemptions.
“We believe self-certified investors should be treated in a similar fashion as accredited investors in the private issuer exemption,” regulators noted.
The proposals are out for comment until Jan. 5, 2026.
In the meantime, alongside the proposed harmonized exemption, the Ontario Securities Commission (OSC) also issued an order Thursday that introduces a new exemption modelled on the proposed harmonized exemption. It will take effect on Oct. 25 — when the existing self-certified exemption in Ontario is due to expire.
“The purpose of this order is to introduce new time-limited prospectus exemptions, based on the [CSA proposal], to facilitate additional capital raising for Canadian issuers and investment opportunities for investors in Ontario while the [CSA proposal] is being finalized,” it said.
“As global geopolitical uncertainty continues to impact both the Canadian and Ontario capital markets, the importance of supporting innovation, growth and competitiveness of new and growing businesses is heightened, as they play an important role in our economy,” said Grant Vingoe, CEO of the OSC, in a statement.
The OSC’s new exemption order is to remain in effect until April 25, 2027, unless it’s extended by the commission.