What's Happening?
The Canadian Securities Administrators (CSA), excluding British Columbia and Québec, have proposed a new Multilateral Instrument 45-111, which aims to allow individuals with relevant education or investment
experience to invest without a prospectus. This proposal follows the Ontario Securities Commission's (OSC) earlier introduction of a similar exemption, Ontario Instrument 45-507, in 2022. The new proposal seeks to expand access to capital for early-stage businesses by broadening the definition of 'accredited investor' to include those with specific qualifications or experience. The proposed exemption would allow non-investment fund issuers headquartered in Canada to distribute securities to self-certified investors who meet certain criteria, such as having relevant employment history, holding specific degrees or designations, or passing qualifying examinations. The proposal is open for public comment until January 5, 2026.
Why It's Important?
This development is significant as it could potentially increase investment opportunities for individuals who possess the necessary expertise but do not meet traditional accredited investor criteria. By broadening the pool of eligible investors, the CSA aims to facilitate greater access to capital for startups and early-stage companies, which could drive innovation and economic growth. The proposal also addresses concerns from issuers about losing their 'private issuer' status under existing regulations, which could encourage more companies to utilize this exemption. If adopted, this could lead to a more dynamic investment landscape, benefiting both investors and businesses seeking capital.
What's Next?
If the Multilateral Instrument 45-111 is adopted, it will replace existing self-certified investor prospectus exemptions in Alberta, Manitoba, Ontario, and Saskatchewan. The Ontario Instrument 45-510, an interim measure based on the new proposal, will come into effect on October 25, 2025, and remain until April 25, 2027, unless extended. The CSA is also considering amendments to include self-certified investors in the list of purchasers under the private issuer exemption, subject to ministerial approval. These changes could lead to increased participation from investors and issuers, potentially reshaping the capital markets landscape in Canada.
