Generally, unless there is an applicable exemption, securities
of a company cannot be distributed in Canada unless a prospectus
has been filed. One common exemption relied upon by private
companies is known as the "private issuer" exemption;
however, this exemption is only available to issuers that meet
certain criteria, including having less than 50 shareholders (not
including employees and former employees) and having constating
documents (e.g., articles of incorporation) which restrict
the transfer of the company's shares.
If the criteria of the "private issuer" exemption
cannot be met, another commonly used prospectus exemption is the
"accredited investor" exemption. On May 5, 2015
previously announced amendments to the accredited investor
exemption took effect. Private, as well as public issuers, should
take note of these amendments.
