On September 8, 2022, The Canadian Securities Administrators (CSA) announced that it was adopting the Listed Issuer Financing Exemption (the new prospectus exemption). Developed for smaller issuers listed on a Canadian stock exchange, it will provide a more efficient way to raise capital.
The new prospectus exemption is detailed in CSA Notice of Amendments to National Instrument 45-106 Prospectus Exemptions to Introduce the Listed Issuer Financing Exemption.
Once adopted, the new prospectus exemption will reduce costs for issuers raising smaller amounts of capital through the public markets. It will also allow smaller issuers greater access to retail investors and provide retail investors with a broader choice of investments. The goal is to reduce regulatory burden for small offerings while maintaining investor protection.
The new prospectus exemption will be available to issuers that have been a reporting issuer in a Canadian jurisdiction for at least 12 months and have filed all continuous disclosure documents required under Canadian securities legislation. Eligible issuers will need to file a short offering document.
Issuers using this exemption may annually raise up to the greater of $5 million or 10 per cent of the issuer’s market capitalization, to a maximum of $10 million. Securities issued under the exemption will be freely tradeable.
In response to comments received by the CSA on the proposed exemption, changes were made to increase investor protection, including imposing primary offering statutory liability in the event of a misrepresentation in the issuer’s offering document or certain continuous disclosure. Provided all necessary Ministerial approvals are obtained, the amendments will come into force on November 21, 2022.
Copies of CSA Notice of Amendments to National Instrument 45-106 Prospectus Exemptions to Introduce the Listed Issuer Financing Exemption are available for download from websites of CSA members.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.