CSA Seeking Comment on Proposed Listed Issuer Financing Exemption

Updated: Apr 17


CSA Seeking Comment on Proposed Harmonized Rules for Start-up Securities Crowdfunding
Listed Issuer Financing Exemption

The Canadian Securities Administrators (the "CSA") are seeking comment on a proposed new capital raising exemption for reporting issuers that have securities listed on a Canadian stock exchange and have published CSA Notice and Request for Comment Proposed Amendments to National Instrument 45-106 Prospectus Exemptions to introduce the Listed Issuer Financing Exemption (the "Notice") for a 90-day comment period expiring on October 26, 2021 for a proposed amendments to National Instrument 45-106 - Prospectus Exemptions ("NI 45-106") to introduce a new prospectus exemption available to reporting issuers that are listed on a Canadian stock exchange (the "Listed Issuer Financing Exemption").


The CSA are proposing the Listed Issuer Financing Exemption to provide a more efficient method of capital raising for reporting issuers that have securities listed on a Canadian stock exchange and that have filed all timely and periodic disclosure documents required under Canadian securities legislation.


The proposed exemption relies on the issuer’s continuous disclosure record, as supplemented with a short offering document, and would allow these issuers to distribute freely tradeable listed equity securities to the public. Issuers would generally be limited to raising the greater of $5,000,000 or 10% of the issuer’s market capitalization to a maximum total dollar amount of $10,000,000. In order to use the exemption, the issuer must have been a reporting issuer for at least 12 months.


The offering document would be a “core document” under Canadian securities legislation, forming part of the issuer’s continuous disclosure record for purposes of secondary market civil liability. In the event of a misrepresentation in the offering document or in the issuer’s continuous disclosure record for a prescribed period, purchasers under the Listed Issuer Financing Exemption would have the same rights of action under secondary market civil liability as purchasers on the secondary market. In addition, purchasers under the exemption would have a contractual right of rescission against the issuer for a period of 180 days following the distribution in the event of a misrepresentation. The offering document would not be reviewed by CSA staff before use.


The CSA issued the Notice to solicit written comments on the Instrument and related matters set out in the Notice and has also included specific questions in the Comments section of the Notice. The comment period is open for 90 days, expiring on October 26 2021.


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