Capital Markets Insights

What is the New Listed Issuer Financing Exemption?

On September 8th 2022, the Canadian Securities Administrators announced the introduction of a new prospectus exemption called the New Listed Issuer Financing Exemption for listed issuers on Canadian stock exchanges, aimed at providing a more efficient way for them to raise capital. National Instrument 45-106 Prospectus Exemptions (NI 45-106) has been amended effective November 21, 2022 to will allow issuers to distribute freely tradeable listed equity securities to the public for capital raises up to either $5,000,000 or 10% of the issuer's market capitalization to a maximum total dollar amount of $10,000,000.

The qualifying requirements for issuers are outlined below. In addition to the qualification requirements, at the time of the offering under this exemption, the issuer must reasonably expect that it will have available funds to meet its business objectives and liquidity requirements for a period of 12 months following the offering.

  1. The issuer has a class of equity securities listed for trading on an exchange recognized by a securities regulatory authority in Canada including TSX, TSX Venture Exchange, CSE, and NEO.
  2. The issuer has been a reporting issuer in at least one jurisdiction in Canada for at least 12 months prior to the news release announcing the offering under the Listed Issuer Financing Exemption.
  3. The issuer is up to date with all of its periodic and timely disclosure filings such as financial statements, management discussion & analysis, material change reports, etc
  4. The issuer, or any party with whom the issuer completed a restructuring transaction within the 12 months prior to the news release announcing the offering under this exemption, may not have ceased operations or have as its principal asset, cash, cash equivalents or its exchange listing (which excludes capital pool companies, special purpose acquisition companies and growth acquisition companies from being eligible).
  5. The issuer is not an investment fund.

Katipult's product DealFlow supports the newly introduced Listed Issuer Financing Exemption and our company expects a growing number of issuers will look to this new prospectus exemption to meet their capital requirements. Katipult DealFlow is an industry-leading solution that functions as the operating system for investment capital. DealFlow enables modern and efficient workflows for retail and institutional investor participation and eliminates human error and deficiencies, creating a superior experience for compliance, equity capital management teams, investment advisors, and investors.