Alberta and Saskatchewan adopt self-certified investor prospectus exemption

The Alberta and Saskatchewan securities regulators adopted a new prospectus exemption intended to increase capital access and investment opportunities for businesses and investors in these provinces.

The new self-certifying exemption

The exemption is based upon an investor self-certifying its financial and investment education and acknowledging the risk involved in making the investment. The conditions of the new exemption are:

• the head office of the issuer must be in Alberta or Saskatchewan;
• for investments in a non-exchange listed issuer, the aggregate cost of the securities of the issuer acquired by the purchaser may not exceed $10,000 in the calendar year;
• for investments in a non-exchange listed issuer, the investor must certify that the aggregate cost of all securities of such issuers acquired by the purchaser in the calendar year under the exemption or a similar exemption in another jurisdiction, if available, does not exceed $30,000;
• for investments in a listed issuer, the issuer will want to confirm suitability advice has been obtained from a registered dealer or other registrant;
• the distribution is made concurrently with a distribution to accredited investors and the same information is provided to all potential investors;
• the purchaser must purchase as principal and sign a statutory declaration that it is a self-certified investor qualified to rely on the exemption;
• the purchaser must acknowledge reading and understanding the form; and
• if not a private issuer, the issuer must file a Form 45-106 F1 in respect of the distribution.

Investor self-certification

The exemption sets out the designations and education that qualify a purchaser as a self-certified investor. These include criteria such as being a certified financial analyst, a certified investment manager, a certified public accountant, a certified business analyst or a certified international wealth manager from the relevant authority. In addition, lawyers, business degree holders and persons who have passed the Canadian Securities Course will be qualified provided certain additional requirements are met. 

Resale restrictions

Any securities purchased under the new exemption are subject to resale restrictions and are freely tradeable if the issuer has been a reporting issuer for four months preceding the resale and it has been four months since the original distribution.

Term limit

The new exemption is enacted by order in each of Alberta and Saskatchewan and is being tested for a three-year period that commenced  March 31, 2021, and will expire April 1, 2024.

A copy of the CSA Multilateral Notice regarding the new exemption is available here.