Finding The Right Flow: Proposed New Self-certified Investor Prospectus Exemption

Fall is always a busy time for regulatory consultations and Fall 2025 was no different as the regulators in a number of jurisdictions other than British Columbia and Québec released CSA Notice and Request for Comment Proposed Multilateral Instrument 45-111 Self-Certified Investor Prospectus Exemption (together with its proposed companion policy, the Proposed Exemption) relating to a new harmonized prospectus exemption for eligible investors.

The Proposed Exemption is intended to work similar to the existing accredited investor prospectus exemption, where an individual would be permitted to purchase securities if they can certify that they meet the qualifying criteria based on their education or experience, sign Form 45-111F2 Acknowledgement of Risks and are provided with Form 45-111F3 Information to Understand before Making an Investment. Such investors would be permitted to invest up to $50,000 per year across a number of non-investment fund issuers that have their head office in Canada.

In order to be eligible to purchase securities under the Proposed Exemption, investors would need to complete Form 45-111F1 Confirmation of Qualifying Criteria and certify that they meet at least one of the following criteria:

1. Qualifying Employment History. A number of eligible alternatives are presented under this qualifying criteria, including that the investor has 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 in which the investor wishes to invest.
2. Qualifying Degree. There are a number of different potential degrees listed in the Proposed Exemption, including 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 or an accredited undergraduate degree in finance, business, or commerce from a university if the investor has a minimum of three years of relevant employment experience.
3. Qualifying Designation. No less than eight potential designations are listed, including the Chartered Financial Analyst (CFA) designation, the Chartered Investment Manager (CIM) designation, the Certified Financial Planner (CFP) designation or a Financial Planner or Financial Advisor credential, in good standing, from a credentialling body approved by the Financial Services Regulatory Authority of Ontario under the Financial Professionals Title Protection Act, 2019, or from a credentialing body comparable to FSRA under corresponding legislation in other participating jurisdictions, that permits the individual to use the Financial Planner or Financial Advisor title.
4. Qualifying Examination. Examples of qualifying exams include passing the Canadian Securities Course Exam administered by the Canadian Securities Institute and the Exempt Market Products Exam administered by the IFSE Institute Canada.

Especially interesting (as it is not currently permitted in all jurisdictions) is the proposal to allow a distribution of securities to a special purpose vehicle if all of the owners of interests (except the voting securities required by law to be owned by directors), are accredited investors or self-certified investors. Each self-certified investor investing in the special purpose vehicle would be subject to the aggregate individual investment limit described above, but not the vehicle itself.

Consequential amendments would be made to other prospectus exemptions, including a clarification that includes self-certified investors in the list of purchasers that can purchase under the private issuer prospectus exemption.

Issuers that distribute securities on the basis of the Proposed Exemption would need to file a report of exempt distribution on Form 45-106F1 Report of Exempt Distribution no later than the 30th day after the distribution. In certain jurisdictions, including Ontario, the seller must also deliver to the securities regulatory authority a copy of any offering memorandum used with the Proposed Exemption no later than the 30th day after the distribution.

If adopted, the Proposed Exemption would replace a number of existing blanket orders and exemptions. A number of questions are posed with respect to the qualifying criteria and risk disclosure forms. Comments will be accepted until January 5, 2026, and we would be pleased to assist you with a letter, should you wish to participate.

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