Members of the Canadian Securities Administrators (“CSA”), other than British Columbia and Québec, recently published for comment Proposed Multilateral Instrument 45-111 Self-Certified Investor Prospectus Exemption (“MI 45-111”), which would permit individuals with relevant education and/or investment experience to invest on a prospectus-exempt basis. Comments are due by January 5, 2026.
Background
As we discussed in a previous post, the Ontario Securities Commission (“OSC”) introduced Ontario Instrument 45-507 Self-Certified Investor Prospectus Exemption (“OI 45-507”) in 2022 to provide a temporary prospectus exemption for self-certified investors. OI 45-507 was adopted following recommendations from Ontario’s Capital Markets Modernization Taskforce to better support access to capital for early-stage businesses, including the expansion of the “accredited investor” definition to those individuals who have completed and passed relevant proficiency requirements indicating a high degree of understanding of investments and markets. In 2024, the OSC made OSC Rule 45-508 Extension to Ontario Instrument 45-507 Self-Certified Investor Prospectus Exemption to extend the relief granted through OI 45-507 until October 25, 2025. Alberta, Manitoba and Saskatchewan similarly adopted their own form of self-certified investor prospectus exemption.
Prospectus Exemption
If adopted, MI 45-111 would allow non-investment fund issuers that have their head office in Canada to distribute securities on a prospectus-exempt basis to investors who are individuals and certify that they meet at least one of the following qualifying criteria:
Qualifying employment history:
- having a minimum of five years of management, engineering, product development or other relevant operational experience at a business that operates in the same industry or sector as the issuer;
- having, in the past five years, been an employee of a business that operates a venture capital fund or a private equity fund, or a business that invests in or provides financing to small or medium sized issuers, and has in that role participated in the investment activities of the business for at least one year;
- having, in the past five years, been the founder of a business or the director of an early-stage business that had in its most recently completed financial year annual revenues of at least C$500,000;
Qualifying degree:
- having practiced law in a jurisdiction of Canada for at least 2 years and, as part of that practice, provided advice in respect of financings involving distributions of securities, or mergers and acquisition transactions;
- holding an accredited Master of Business Administration (MBA), Doctor of Business Administration, PhD or master’s degree from a university, where the degree specializes in finance or economics;
- holding an accredited undergraduate degree in finance, business or commerce from a university, and having a minimum of three years of relevant employment experience;
- holding an accredited degree from a university with a focus or specialization that directly relates to the industry or sector that the issuer operates in, and has a minimum of three years of relevant employment experience;
Qualifying designation:
- holding certain professional designations, such as a Chartered Financial Analyst (CFA), Chartered Investment Manager (CIM), Chartered Business Valuator (CBV), Chartered Professional Accountant (CPA), Certified International Wealth Manager (CIWM) or Certified Financial Planner (CFP) designation;
- holding a Financial Planner or Financial Advisor credential, in good standing, from a credentialling body approved by the Financial Services Regulatory Authority of Ontario (“FSRA”) under the Financial Professionals Title Protection Act, 2019, or from a credentialling body comparable to FSRA under corresponding legislation in other participating jurisdictions, that permits the individual to use the Financial Planner or Financial Advisor title;
Qualifying examination:
- having passed the Canadian Securities Course Exam administered by the Canadian Securities Institute, the Exempt Market Products Exam administered by the IFSE Institute of Canada or having passed both the Series 7 Exam administered by the Financial Industry Regulatory Authority in the United States and the New Entrants Course Exam administered by the Canadian Securities Institute.
To avail themselves of the exemption, investors would also be required to confirm that they have read and understood each of the risks associated with the investment and represent in the purchase agreement that, after completion of the distribution, the combined acquisition cost of all securities acquired under this exemption in the calendar year does not exceed C$50,000.
MI 45-111 would also allow issuers to distribute securities to a special purpose vehicle (“SPV”) on a prospectus-exempt basis, provided that all of the owners of interests in the SPV, except the voting securities required by law to be owned by directors, are accredited investors or self-certified investors.
If MI 45-111 is adopted, the self-certified investor prospectus exemptions that are currently in place in Alberta, Manitoba, Ontario and Saskatchewan will be revoked.
Consequential Developments
As OI 45-507 will expire on October 25, 2025, the OSC has made Ontario Instrument 45-510 Self-Certified Investor Prospectus Exemption (Interim Class Order) (“OI 45-510”). OI 45-510 is based on MI 45-111 and is intended to facilitate additional capital raising and investment opportunities while MI 45-111 is being finalized. OI 45-510 comes into force on October 25, 2025, and will remain in effect until April 25, 2027, unless extended by the OSC.
The CSA have received feedback that certain issuers have been unwilling to rely on the current self-certified investor prospectus exemptions due to concerns that they will lose their status as a “private issuer” under National Instrument 45-106 Prospectus Exemptions (“NI 45-106”). As a result, it is proposed that self-certified investors be included in the list of purchasers that can buy securities under the private issuer exemption. Subject to ministerial approval, the OSC is adopting such local amendments to NI 45-106 as of December 4, 2025.
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