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New Private Placement Exemption 

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New Private Placement Exemption  Aquilina Law November 29, 2022

New Private Placement Exemption 

Photo by Adrien Olichon on Unsplash

While the Province of Ontario is home to a vibrant securities market, it has not traditionally been the most flexible Canadian jurisdiction when it comes to private placement rules. Similarly to the American legal landscape, in order to issue securities in Canada without a prospectus (and in many instances without involving a registered broker), an entity must rely on securities exemptions. These exemptions can make smaller raises cost-ineffective and more difficult.  

On October 25, 2022, following analogous regulatory action in the provinces of Alberta and Saskatchewan, the Ontario Securities Commission (the “OSC”) created a new exemption from the Securities Act’s prospectus requirement that permits a distribution of securities in Ontario by an Ontario issuer to investors self-certified as financially literate. The OSC issued an interim order [1] that allows an issuer, other than an investment fund, with a head office in Ontario to rely on a prospectus exemption where it is distributing securities to a “self-certified investor”. To be considered a self-certified investor, at least one of the qualifying criteria outlined in Annex 1 to the order must be met, which include sixteen options based on financial and investment knowledge. Each investor can invest up to CAD $30,000 per calendar year in reliance on the exemption. 

In order to self-certify, investors are required to complete a confirmation of the qualifying criteria as well as a risk acknowledgement stating they understand the risks involved. Issuers relying on this prospectus exemption are required to file a report with the OSC within 10 days of the distribution. Securities issued in reliance on the exemption will be subject to the same resale restrictions as trades made in reliance on the well-known “accredited investor” exemption (i.e., for reporting issuers, a 4-month hold period, and for non-reporting issuers, a hold period that lasts until the issuer becomes a reporting issuer plus, usually, 4 months past that date).  

The interim order is intended to provide access to new sources of capital for issuers in Ontario and increased investment opportunities for investors in Ontario who can adequately understand the risk of investment but who may not meet the current financial requirements of the accredited investor criteria. Unless extended, the interim order will remain in effect until April 25, 2024.


[1] Ontario Instrument 45-507, Self-Certified Investor Prospectus Exemption (Interim Class Order).

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