On May 14, 2025, the Canadian Securities Administrators ("CSA") released Coordinated Blanket Order 45-935 ("Order 45-935"), which provides certain exemptions from several requirements for issuers using the listed issuer financing exemption (the "LIFE Exemption") under Part 5A of National Instrument 45-106 Prospectus Exemptions ("NI 45-106"). The LIFE Exemption was introduced in November 2022 in order to provide for a more efficient way for reporting issuers listed on stock exchanges to raise capital (for more information regarding the LIFE Exemption, please consult the following bulletin from Fogler, Rubinoff, published on September 12, 2022). Under item 5A.2(g) of NI 45-106, issuers using the LIFE Exemption were limited to raising the greater of: (i) $5,000,000 and (ii) 10% of the issuer's aggregate market value to a maximum of $10,000,000 in a 12-month period, subject to a 50% dilution limit.
Under Order 45-935, the CSA provides relief from these conditions by allowing listed reporting issuers to raise the greater of:
- $25,000,000; and
- 20% of the aggregate market value of the issuer's listed securities to a maximum of $50,000,000 in a 12-month period, subject to different provisions related to the 50% dilution limit.
With respect to the aforementioned 50% dilution limit, the timing for calculating the outstanding securities is:
- the date of the news release announcing the offering if an issuer has not relied on the exemption or the blanket order in the last 12 month; or
- the date of the news release announcing the first offering completed in reliance on the exemption or the blanket order in the last 12 months.
For the purposes of the foregoing, issuers can exclude securities issuable on the exercise of warrants from the calculation if the warrants are not convertible within 60 days of closing of the prospective offering.
Furthermore, under Order 45-935, a distribution under an offering using the LIFE Exemption cannot result in:
- the creation of a new "control person"; or
- a person acquiring ownership / control or direction over a sufficient number of securities which would entitle said person to elect a majority of directors.
The CSA noted that the changes in Order 45-935 related to the timing of the 50% dilution limit address a condition of the LIFE Exemption that requires the calculation to be based on the issuer's outstanding securities 12 months before the offering. Further, under Order 45-935, only warrants convertible within 60 days of the closing need to be included in the 50% dilution calculation. This relief expands the number of warrants an issuer may be able to issue, as under the LIFE Exemption all securities on conversion of warrants need to be included in the dilution calculation.
Order 45-935 comes into effect on May 15, 2025. In certain jurisdictions, the blanket order includes an expiry date based on the term limits for blanket orders in the jurisdiction (i.e. 18 months from the effective date).
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