New Prospectus Exemption Facilitates Efficient Capital Raising – Securities

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Effective November 21, 2022, reporting issuers listed on a Canadian stock exchange may distribute freely tradable securities to investors without filing a prospectus, subject to certain conditions.

In response to stakeholder feedback, the Canadian Securities Administrators (“CSA“) announced on September 8, 2022 a new prospectus exemption that allows reporting issuers listed on a Canadian stock exchange to more effectively access public markets and raise capital. will rely on an issuer’s continuous disclosure record and an abbreviated offering document allowing issuers to distribute freely tradeable listed equity securities to the public.

Reporting issuer conditions

In order to qualify for the listed issuer financing exemption, a reporting issuer must meet the following conditions:

  1. be a reporting issuer in at least one jurisdiction of Canada for at least 12 months immediately prior to announcing its intention to rely on the listed issuer financing exemption;

  2. have equity securities listed on a recognized Canadian stock exchange;

  3. must have filed all periodic and timely disclosure documents under applicable securities laws and orders or undertakings with securities authorities;

  4. not be an issuer that has gone out of business within the past 12 months or whose assets are primarily cash, cash equivalents, or a stock exchange listing (for example, venture capital companies on the Venture Exchange TSX or special purpose acquisition companies under US securities laws); and

  5. not be an issuer of investment funds.

Distribution Terms

Provided the reporting issuer meets the above conditions, the listed issuer financing exemption may be used to distribute freely tradable securities to investors provided that the distribution meets the following requirements:

  • an issuer’s distributions made under the listed issuer financing exemption do not exceed the greater of $5 million or 10% of the aggregate market value of the reporting issuer’s securities on the date on which the issuer issues a press release announcing the placement, up to a maximum of $10 million in the last 12 months;

  • an issuer’s distributions made under the listed issuer financing exemption do not result in an increase of more than 50% of the issuer’s listed securities over the previous 12 months;

  • the securities distributed under the listed issuer financing exemption must be either:
    • a listed equity security, or

    • a unit consisting of a listed equity security and a warrant convertible into a listed equity security; and

  • capital funds raised through listed issuer financings are not used to:
    • a transaction that requires the approval of any security holder;

    • a major acquisition; Where

    • a restructuring transaction that would require additional financial statements under securities prospectus rules.

Offer document and press release

If the above conditions are met, issuers may issue prospectus-exempt securities on a free-trade basis under the Listed Issuer Financing Exemption by issuing and filing a press release announcing the intended offering with the regulatory authorities. relevant securities and on SEDAR. In addition to a press release, issuers must prepare and file an offering document in Form 45-106F19 Listed Issuer Finance Document (there “Offering Document“) from the relevant securities regulatory authorities containing certain information, including:

  • the price and details of the securities offered;

  • a brief summary of the issuer’s business;

  • any recent development affecting the issuer’s business;

  • any material facts not disclosed in the issuer’s other public disclosure documents;

  • a statement confirming that the offering document has not been reviewed by securities regulators;

  • a summary of the statutory rights available to the respective purchasers of the securities; and

  • the proposed use of the funds raised.

In particular, if there is a misrepresentation in the Offer Document, then purchasers of any securities issued under the misrepresented Offer Document will have the right to:

  • cancel the purchase of securities; Where

  • bring an action for damages against the issuer – and, in some jurisdictions, against the issuer’s directors and any officers who signed the offering document.

The offering document will not be reviewed by the CSA or its staff prior to the offering of securities under the listed issuer financing exemption.


The listed issuer financing exemption introduced by the CSA is intended to improve the efficiency of the Canadian capital market by eliminating the need for short form prospectuses, while maintaining safeguards to ensure investor protection. In particular, smaller reporting issuers will benefit from improved access to capital through reduced compliance costs.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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