The increased pace of regulatory change experienced over the last few years appears poised to continue during 2015, along with the Canadian Securities Administrators’ (CSA) focus on enhancing protections for retail investors.  The CSA recently finalized and released important amendments to National Instrument 45-106 Prospectus and Registration Exemptions (to be retitled National Instrument 45-106 Prospectus Exemptions) as well as the Companion Policy to NI 45-106 (NI 45-106 and CP45-106) and other related instruments. 

These are the most significant changes to Canada’s exempt marketplace in many years and will be effective on May 5, 2015.  This regulatory development will have a significant impact on issuers, registrants and investors alike.  Some of the most popular prospectus exemptions in NI 45-106 are being overhauled and new prospectus exemptions introduced, including a version of the friends, family and business associates exemption in Ontario and a new exemption aimed at asset-backed commercial paper. These changes will have implications for issuers’ subscription agreements, offering memoranda and compliance practices, among other things, while dealers and other registrants will need to understand the implications of the amendments on their ability to make recommendations to clients about exempt market securities. 

The amendments are the result of the CSA’s on-going review of the exempt market in Canada and, in particular, whether the prospectus exemptions that are currently available in NI 45-106 remain relevant in light of economic developments and the perceived need for more protections for retail investors.  And while there is more to come – for example, we await the CSA’s revised crowdfunding proposals and the revamped reporting requirements for exempt distributions – these amendments will result in a shift in emphasis in the exempt markets from “buyer beware” to a more paternalistic “investor protectionist” approach.

We would be pleased to assist you with determining how these amendments will affect your firm, its business, compliance procedures and documentation. We can also assist in determining how the new exemptions can be best leveraged.  It will be important to be proactive in making these determinations so that you are not caught off guard on May 5, 2015. Please contact your usual lawyer in BLG’s Securities & Capital Markets group, including in BLG’s Investment Management group, or the authors indicated below.


Rebecca A. Cowdery

Donna Spagnolo

Michael T. Waters

Michael Taylor

Other Author

Michael Burns


Securities, Capital Markets and Public Companies
Investment Management