Canadian Securities Regulators Announce Changes to Support Capital-Raising Efforts

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Introduction

In an effort to ease regulatory pressures and improve access to Canadian public capital markets, on April 17, 2025, the Canadian Securities Administrators (the “CSA”) released three harmonized blanket orders that simplify and streamline certain aspects of the capital-raising process. These initiatives notably:

• eliminate the requirement for a third year of annual financial statements in a long-form prospectus, which is the type of prospectus filed as part of an initial public offering (“IPO”);
• update marketing rules during a prospectus offering to allow for the communication of changes to the deal size and pricing without filing an amended prospectus;
• create a new exemption for new reporting issuers to raise a limited amount of funds without a prospectus within the first 12 months of its IPO; and
• increase the annual investment limit for eligible investors under the “offering memorandum exemption” where the investment constitutes a reinvestment in the issuer.

These reforms form part of a broader effort by Canadian securities regulators to balance the capital-raising needs of market participants with investor protection and boost the competitiveness of Canada’s public capital markets.

Summary of the Changes

Coordinated Blanket Order 41-930: Exemptions From Certain Prospectus and Disclosure Requirements

Two Years of Audited Financial Statements

Blanket Order 41-930 (the “Prospectus and Disclosure Order”) alters the well-established requirement for issuers to include three years of audited financial statements in a long-form prospectus pursuant to the provisions of Form 41-101 Information Required in a Prospectus (“Form 41-101”). Form 41-101 is the form of prospectus filed in connection with an IPO. The Prospectus and Disclosure Order provides that issuers and offerors filing a long-form prospectus are exempt from the requirement to provide a third year of historical financial statements and need only provide the most recently completed two years of audited financial statements. The exemption extends to circulars and material change reports that directly or indirectly reference the long-form prospectus requirements in Form 41-101 as well.

The amendments reflect evolving market expectations and align Canadian financial statement disclosure requirements for IPOs with those of comparable jurisdictions.

New Marketing Rules

To help facilitate flexibility and deal certainty, Canadian securities regulators have amended the rules governing the marketing of prospectus offerings. Prior to the implementation of the Prospectus and Disclosure Order, term sheets and marketing materials provided to investors during the period between the filing of a preliminary prospectus and the filing of a final prospectus (such period being referred to as the “waiting period” in applicable Canadian securities legislation) could only include information disclosed in, or derived from, a previously filed preliminary prospectus or an amendment to a preliminary prospectus. This meant that any pricing or deal size changes that occurred after filing the preliminary prospectus necessitated the filing of an amended preliminary prospectus before the marketing materials could be distributed to investors. The Prospectus and Disclosure Order provides that issuers can now increase or decrease the size or pricing of an offering in marketing materials distributed during the waiting period without having to file an amendment to the preliminary prospectus, provided the information is first disclosed in a press release which is disseminated and filed on SEDAR+ and certain other requirements are met.

These changes better align Canadian securities law requirements with actual practice and acknowledge the limited benefit and relative cost of filing a prospectus amendment where the pricing and size updates to the offering can instead be publicly disclosed in a news release and filed on SEDAR+.

New Treatment of Promoters

When filing a prospectus, Form 41-101 requires the CFO, CEO, directors and “promoter,” if any, to sign a certificate appended to the prospectus, which can attract statutory civil liability to the signatory in the event there is a misrepresentation in the document. Typically, the founder of an issuer is considered a “promoter,” and they often sign the prospectus certificates in their capacity as both an officer and/or director as well as a promoter. The Prospectus and Disclosure Order simplifies the certificate obligation and exempts promoters from signing as such if they already sign the prospectus certificates in another capacity, thereby reducing time and money spent by issuers in seeking out exemptive relief from regulators to achieve the same effect.

Additionally, Canadian securities laws formerly did not concretely determine when an individual would cease to be considered a promoter under the prospectus requirements. The Prospectus and Disclosure Order now exempts promoters or former promoters from signing a certificate to the prospectus if they meet all of the following conditions:

• the issuer has been a reporting issuer for at least 24 months;
• the individual is not a director, officer or control person of the issuer; and
• the securities being offered are not asset-backed securities.

Coordinated Blanket Order 45-930: Prospectus Exemption for New Reporting Issuers

Under Coordinated Blanket Order 45-930 (the “New Reporting Issuer Exemption”), companies that have recently become reporting issuers through an underwritten IPO now have a prospectus exemption, provided the raise occurs within 12 months of the IPO and certain other conditions are met, including, amongst others:

• the size of the offering is limited to the lesser of $100 million and 20% of the market value of the issuer’s listed equity securities on the date it issues the news release announcing the first offering in reliance on the exemption;
• the offering must be for the same class of securities as those offered in the IPO and at a price per security no less than as was offered in the IPO; and
• the issuer must publicly announce the offering via a news release and file a simplified offering document on SEDAR+ before any sales in reliance on this exemption occur.

Availability of the New Reporting Issuer Exemption is also contingent on the issuer remaining compliant with its continuous disclosure obligations and remaining in good standing under Canadian securities laws.

The New Reporting Issuer Exemption could be beneficial for newly listed companies seeking to raise follow-on capital in a cost-effective and timely manner. One note of caution: Issuers seeking to avail themselves of the New Reporting Issuer Exemption must be mindful of any contractual lock-up obligations they may be subject to with their IPO underwriters, which may limit the time during which this exemption is available to them.

Coordinated Blanket Order 45-933: Exemption From the Investment Limit Under the Offering Memorandum Prospectus Exemption to Exclude Reinvestment Amounts

The final blanket order focuses on amending investment limits under the “offering memorandum exemption” (the “OM Exemption”) in Section 2.9 of National Instrument 45-106 Prospectus Exemptions (“NI 45-106”). Pursuant to the OM Exemption, an individual who does not qualify as an “accredited investor” as defined in NI 45-106 can invest up to $100,000 in reliance on the OM Exemption, provided they are an “eligible investor” as defined in NI 45-106 and they receive advice from a registered dealer or advisor as to the suitability of the investment. In Alberta, New Brunswick, Nova Scotia, Ontario, Quebec and Saskatchewan, Coordinated Blanket Order 45-933 (the “OM Reinvestment Exemption”) now allows eligible investors to reinvest proceeds in the same issuer without those amounts impacting their annual investment cap under the OM Exemption, effectively allowing investment of up to $200,000 in the same issuer annually, provided certain conditions are met.

The OM Reinvestment Exemption is relevant for certain repeat or long-term investors who wish to maintain or increase their stake in an issuer using funds returned from previous investments with those issuers.

Conclusion

Taken together, these incremental but impactful changes reflect the CSA’s growing recognition that modern Canadian capital markets require a regulatory framework that is responsive to shifting market environments while fulfilling their investor protection role. By reducing friction in disclosure obligations, streamlining the marketing regime and follow-on fundraising exemptions, and increasing flexibility for reinvestment, Canadian regulators are taking concrete steps to improve access to capital – particularly for early-stage and growth-focused issuers – without compromising investor protection.

The Capital Markets Group at Aird & Berlis LLP will continue to monitor changes announced by the CSA. Please contact the authors or a member of the group to discuss how these changes may impact your disclosure obligations or ability to access additional capital.