Canadian securities regulators are moving to permanently implement a significantly higher capital-raising limit for listed companies, a move that has already dramatically increased the use of prospectus-exempt offerings since its temporary introduction. The proposed amendments to National Instrument 45-106, put forth by the Canadian Securities Administrators (CSA) on July 23, 2026, aim to formalize a temporary blanket order that has allowed reporting issuers to raise substantial funds from the public without the extensive disclosure requirements of a traditional prospectus. This proposed regulatory shift, currently open for a 90-day public comment period concluding on October 21, 2026, represents a pivotal moment for capital formation in Canada, with significant implications for issuers, investors, and market intermediaries.
The cornerstone of the proposed changes is the codification of a temporary blanket order first issued by the CSA in May 2025. This order dramatically expanded the amount an eligible issuer could raise, setting the limit at the greater of $25 million or 20 percent of the market value of its listed securities, capped at $50 million within a 12-month period. This represents a substantial increase from the prior ceiling of $10 million. The regulators have explicitly stated that this adjustment has “materially increased” the utilization of the listed issuer financing exemption.
Surge in Capital Raised Under Temporary Exemption
The impact of the temporary order on capital raising has been demonstrably significant. In the approximately two and a half years preceding the blanket order’s implementation, a total of 280 issuers had raised $1.1 billion through this exemption, averaging a modest $3.9 million per issuer. However, in the single year following the order’s enactment, the landscape shifted dramatically. A total of 349 issuers successfully raised $3.7 billion, more than tripling the previous aggregate amount and pushing the average capital raised per issuer to $10.6 million. Notably, 40 of these issuers managed to secure over $25 million, underscoring the increased capacity for larger fundraising rounds under the enhanced limit. This surge in activity suggests a strong market appetite for companies leveraging this streamlined financing route.
Easing the Path for Issuers and Investors
The proposed regulatory changes are designed to offer a more accessible and efficient capital-raising mechanism for a broader spectrum of Canadian listed companies. By making the higher limit permanent, the CSA aims to foster continued growth and liquidity within the public markets.
Relaxed Financial Requirements and Enhanced Disclosure
A key aspect of the proposed amendments involves easing the "sufficiency of funds" test for issuers. Under the new framework, an issuer would only need to demonstrate a reasonable expectation of meeting its short-term liquidity requirements, rather than proving it has sufficient funds to cover its business objectives and overall liquidity needs for a full 12 months. The CSA acknowledged that some smaller issuers had found the existing, more stringent test difficult to satisfy.
However, this relaxation of financial scrutiny is to be balanced with enhanced disclosure obligations. Issuers facing going-concern uncertainty or a demonstrable decline in their financial condition will be required to provide more comprehensive disclosure about their financial status within the offering document. This aims to ensure that investors are adequately informed about potential risks associated with these companies, even when a full prospectus is not required.
Expanded Eligibility and Streamlined Processes
Beyond the financial tests, the proposed amendments also broaden the scope of eligible issuers and streamline procedural aspects of the exemption. The changes would permit "successor issuers" to utilize the exemption, which is crucial for companies undergoing reorganizations or acquisitions. Furthermore, the window for closing an offering would be extended from 45 days to 60 days, providing issuers with greater flexibility in completing their financing rounds.
The lookback period for certificates, a key component of the disclosure process, would be extended to 18 months, offering a more comprehensive historical view. Additionally, under specific conditions, issuers would be permitted to omit the offering price from the offering document itself, a move intended to simplify the document while still ensuring transparency through other disclosure mechanisms. Finally, the continuous disclosure liability period for issuers would be extended from 12 months to 18 months, aligning with the broader changes in disclosure requirements.
Implications for Market Intermediaries and Retail Investors
The proposed changes are also poised to impact financial advisors, dealers, and the retail investors they serve. The increased attractiveness of prospectus-exempt offerings for smaller listed issuers is expected to broaden the investment opportunities available to retail clients. The reliance on an issuer’s continuous disclosure record, rather than a lengthy prospectus, simplifies the investment process. The offering document will now explicitly direct investors to seek advice from registered professionals, reinforcing the role of intermediaries in guiding investment decisions.
For dealers and finders involved in these offerings, the CSA is proposing clarified disclosure requirements. This aims to ensure transparency regarding their engagement and compensation, fostering greater accountability within the distribution process. This proactive approach by regulators seeks to maintain investor confidence while facilitating market access.
A Look Back: The Genesis of the Temporary Relief
The temporary blanket order, issued in May 2025, was a response to evolving market conditions and a recognition of the challenges companies faced in accessing capital. The original National Instrument 45-106, introduced in November 2022, provided a prospectus-free route for reporting issuers, but the initial capital limit proved restrictive for many. The COVID-19 pandemic and subsequent economic uncertainties highlighted the need for more agile and efficient capital-raising tools. The CSA’s decision to temporarily increase the limit was a pragmatic measure to support businesses and stimulate economic activity. The subsequent surge in its use demonstrated a clear demand for this financing mechanism.
Ontario Takes the Lead in Permanence
In anticipation of the CSA’s national proposal, the Ontario Securities Commission (OSC) has already taken steps to ensure continuity of this relief within its jurisdiction. On July 9, 2026, the OSC published OSC Rule 45-513, which makes the terms of the blanket order permanent until the final CSA amendments are adopted. This rule is slated to come into effect on October 16, 2026, pending approval from the Minister of Finance, and will bridge the gap until the national framework is finalized. The expiry of the blanket order in Ontario on November 15, 2026, further underscores the urgency of this regulatory move. OSC staff have reportedly reviewed offerings made under the exemption in Ontario and have not identified significant non-compliance or public interest concerns, providing a positive precedent for the broader adoption of these changes.
Broader Market Analysis and Future Outlook
The proposed permanent increase in the prospectus-exempt capital raising limit signifies a broader regulatory trend towards facilitating capital formation in Canada, particularly for emerging and growth-stage companies. By reducing the regulatory burden associated with traditional prospectuses, regulators are aiming to make the public markets more accessible and appealing for a wider range of businesses.
However, this liberalization of capital raising rules is not without its inherent risks. The reduced disclosure requirements, while beneficial for issuers, place a greater onus on investors to conduct their own due diligence and to rely on the continuous disclosure records of companies. The proposed enhancements to disclosure for financially distressed issuers are a crucial countermeasure, but vigilant oversight and investor education will remain paramount.
The success of this initiative will ultimately be measured by its ability to foster sustainable growth and capital allocation without compromising investor protection. The ongoing comment period provides an opportunity for all stakeholders to voice their concerns and contribute to shaping a regulatory framework that balances innovation with prudent risk management. The CSA’s proposal to make permanent the higher capital-raising limit signals a clear intent to modernize Canada’s capital markets and to empower companies seeking to grow and innovate. The market will be closely watching the feedback received during the comment period and the finalization of these significant regulatory changes.
The full text of the CSA’s notice and request for comment regarding proposed amendments to National Instrument 45-106 Prospectus Exemptions Relating to the Listed Issuer Financing Exemption is available on the Ontario Securities Commission website, with comments due by October 21, 2026.
