In connection with the Canadian Securities Administrators’ (“CSA”) recent measures to support the competitiveness of Canada’s capital markets, the CSA have announced an increase to the amount of funds that may be raised under the listed issuer financing exemption (“LIFE” or the “Exemption”). This relief has been implemented through Coordinated Blanket Order 45-935 Exemptions from Certain Conditions of the Listed Issuer Financing Exemption (the “Blanket Order”). The Blanket Order is in effect and will expire on November 15, 2026, in Ontario.
As we discussed in a previous post, the Exemption came into force in November 2022 and provides issuers with listed equity securities that meet certain qualification criteria with an efficient method of raising capital on a prospectus-exempt basis. An attractive feature is that securities issued pursuant to a LIFE offering are freely tradeable.
The CSA have indicated that while feedback regarding the Exemption has been positive, market participants have noted that the capital raising limits have restricted the use of LIFE offerings. Prior to the Blanket Order, issuers relying on the Exemption were limited to raising the greater of: (i) C$5 million; and (ii) 10% of the aggregate market value of the issuer’s listed securities to a maximum of C$10 million; during a 12-month period.
The Blanket Order lifts the current cap, permitting issuers to raise an amount that, when combined with all other LIFE offerings of the issuer in the preceding 12 months, does not exceed the greater of: (i) C$25 million; and (ii) 20% of the aggregate market value of the issuer’s listed securities on the date of the news release announcing the first LIFE offering in that 12-month period (the “First News Release”), to a maximum of C$50 million. The distribution, including securities issuable on conversion of warrants if the warrants are convertible within 60 days of closing, combined with all other LIFE offerings during the preceding 12 months, cannot result in an increase of more than 50% of the issuer’s outstanding listed equity securities as of the date of the First News Release. Other conditions include that the distribution not result in a new control person or a person or company acquiring ownership of, or exercising control or direction over, such number of securities that would result in such person or company being entitled to elect a majority of the issuer’s directors.
The CSA have also republished CSA Staff Notice 45-330 (Revised) Frequently Asked Questions About the Listed Issuer Financing Exemption to provide additional guidance on how the Exemption will work with the Blanket Order.
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