The Canadian Securities Administrators (CSA) has announced it is increasing the capital-raising limit under the listed issuer financing exemption, implemented through the publication of harmonized blanket orders, effective May 15.
This change allows listed issuers to raise whichever is greater between $25 million and 20 percent of the aggregate market value of their listed securities, subject to a $50-million ceiling within a 12-month period, as well as other conditions.
One condition prevents the distribution of issuers from leading to an increase of over 50 percent of their outstanding listed equity securities within the period, according to a news release from Canada’s securities regulators.
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In its news release, the CSA said the change seeks to allow listed issuers to raise more capital cost-effectively and to drive overall competition among the country’s capital markets. The CSA stressed that the relief marks a notable increase from the previously imposed $10 million limit.
“This change reflects our ongoing work to support the Canadian capital markets to make it more efficient and cost-effective for companies to raise capital and grow in Canada,” said Stan Magidson, the CSA’s chairman and the Alberta Securities Commission’s chairman and CEO, in the news release.
The CSA noted that blanket orders in certain jurisdictions contain expiry dates depending on the term limits for such orders in these jurisdictions. The CSA urged issuers to review “Coordinated Blanket Order 45-935 Exemptions from Certain Conditions of the Listed Issuer Financing Exemption” to learn more about the change.
More on exemption
In November 2022, the CSA introduced the listed issuer financing exemption – found in “National Instrument 45-106 Prospectus Exemptions” – as a capital-raising option geared toward efficiency. Reporting issuers who are listed on recognized exchanges and who have timely filed the periodic disclosure documents mandated under Canada’s securities laws may avail of this option.
The CSA shared that over 270 issuers have since used the exemption and raised more than $1 billion in total. According to the CSA, while it has received positive feedback about the exemption, some issuers have found the capital-raising limit restrictive.
“We are committed to a Canadian regulatory environment that is responsive to the changing needs of market participants, while upholding strong investor protections,” Magidson said in the CSA’s news release.
The CSA said this harmonized relief is the most recent among its other efforts aimed at benefiting market participants. The CSA also recently announced blanket orders seeking to support companies going public.