Private Placements: Regulators Propose Changes To Key Exemptions

Canadian securities regulators are proposing changes to two of the most commonly used capital-raising exemptions—the accredited investor exemption and the minimum amount investment exemption (also referred to as the "$150,000 exemption"). The changes are designed to address investor protection concerns and are not expected to have a significant impact on the ability of issuers to raise capital in the exempt market.

Changes to the Accredited Investor Exemption

The accredited investor exemption permits sales of securities to institutional investors and high net worth individuals. No changes are being proposed to the income or asset thresholds used in the definition of accredited investor. The exemption will remain available to individual accredited investors¹ ; however, to address concerns that some accredited investors may not understand the risks associated with exempt market investments or may not qualify as accredited investors, if the changes are adopted,