SECURITIES LAW UPDATE: Canadian Securities Administrators (CSA) Expand Capital-raising Under Listed Issuer Exemption

The Canadian Securities Administrators (the "CSA") is increasing the limit on capital-raising under the listed issuer financing exemption to support the competitiveness of Canada’s capital markets. This move is the latest in a series of recent CSA actions, including other blanket orders, to help companies grow.

The CSA has published substantively harmonized relief from certain conditions of the listed issuer financing exemption (the exemption) in National Instrument 45-106 - Prospectus Exemptions ("NI 45-106") to allow listed issuers to raise more capital in a cost-effective way.  

The listed issuer exemption was introduced in November 2022 through amendments to NI 45-106 (and certain other consequential amendments) to offer a more efficient capital-raising option for reporting issuers that are listed on recognized exchanges and have filed all timely and periodic disclosure documents required under Canadian securities legislation.  The listed issuer exemption allowed reporting issuers with equity securities listed on a Canadian stock exchange to raise the greater of $5 million and 20 per cent of the aggregate market value of their listed securities to a maximum of $10 million in a 12-month period, subject to certain conditions, by filing a Form 45-106F19 Listed Issuer Financing Document (offering document) and distribute freely tradeable equity securities in reliance on the issuer’s continuous disclosure record, subject to certain conditions outlined in NI 45-106. Since its adoption, the exemption has been used by more than 270 issuers, collectively raising over $1 billion.

On June 1, 2023 the CSA published CSA Staff Notice 45-330 - Frequently Asked Questions about the Listed Issuer Financing Exemption to address some of the frequently asked questions regarding the listed issuer exemption.

Listed issuers can now raise the greater of $25 million and 20 per cent of the aggregate market value of their listed securities to a maximum of $50 million in a 12-month period, subject to certain conditions, including that the distribution will not result in an increase of more than 50 per cent of the issuer’s outstanding listed equity securities during the period. This is a significant increase from the previous $10 million limit under the exemption.

Since its adoption, the exemption has been used by more than 270 issuers, collectively raising over $1 billion. Market participants have responded positively to the exemption but noted that the capital-raising limits have been restricting use of the exemption.

The relief is being implemented through coordinated blanket orders which come into effect on May 15, 2025. In certain jurisdictions, the blanket order includes an expiry date based on the term limits for blanket orders in the jurisdiction. Issuers and their management can consult Coordinated Blanket Order 45-935 Exemptions from Certain Conditions of the Listed Issuer Financing Exemption for details.

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