Effective May 15, 2025, the Canadian Securities Administrators (CSA) is increasing the limit on capital-raising under the listed issuer financing exemption. This amendment aims to improve the competitiveness of Canada’s capital markets by increasing efficiency and cost-effectiveness. This decision is part of a series of recent measures undertaken by the CSA, including other blanket orders, aimed at fostering growth among companies without compromising investor protections.
The CSA is comprised of various securities regulators from both provinces and territories. It works to coordinate the Canadian capital markets and ensure that they are harmonized. The CSA is issuing substantively harmonized relief from certain conditions of the listed issuer financing exemption in National Instrument 45-106 Prospectus Exemptions, enabling listed issuers to raise additional capital in a cost-effective manner.
Listed issuers are now able to raise either $25 million or 20% of the aggregate market value of their listed securities (whichever is greater), up to a maximum of $50 million within a 12-month period. This marks a substantial increase from the previous limit of $10 million under the exemption. However, this is contingent upon specific conditions, including that the distribution will not result in an increase of more than 50% of the issuer’s outstanding listed equity securities during the specified period.
Stan Magidson, CSA Chair and Chair and CEO of the Alberta Securities Commission, said “this change reflects our ongoing work to support the Canadian capital markets to make it more efficient and cost-effective for companies to raise capital and grow in Canada.”
Introduced in November 2022, the exemption aims to provide a streamlined capital-raising option for reporting issuers listed on recognized exchanges who have met all timely and periodic disclosure requirements mandated by Canadian securities legislation. Since its inception, the exemption has been utilized by over 270 issuers, collectively raising in excess of $1 billion.
To date, market participants have had positive views regarding the exemption. However, it was noted that the practical use of the exception has been limited due to the capital-raising limits. “We are committed to a Canadian regulatory environment that is responsive to the changing needs of market participants, while upholding strong investor protections,” said Stan Magidson.
The relief will be enacted through coordinated blanket orders effective May 15, 2025. In order to align with certain jurisdictions’ term limits for blanket orders, the order may include an expiry date.
For more information, market participants are advised to review Coordinated Blanket Order 45-935 Exemptions from Certain Conditions of the Listed Issuer Financing Exemption.