The LIFE Exemption Levels Up: The CSA’s Proposed Overhaul Of Listed Issuer Financing Exemption

The listed issuer financing prospectus exemption (the “LIFE Exemption”) was first introduced in November 2022. The Canadian Securities Administrators’ (the “CSA”) purpose in introducing the LIFE Exemption was to offer reporting issuers an efficient mechanism to raise capital so long as they have met certain requirements including, but not limited to, having filed all required continuous disclosure documents and having securities listed on a recognized exchange.

More than three years following the introduction of the LIFE Exemption, the CSA issued Coordinated Blanket Order 45-935 Exemptions from Certain Conditions of the Listed Issuer Financing Exemption (the “Blanket Order”) in May 2025. The Blanket Order was intended to increase the amount of capital that could be raised under the LIFE Exemption, increase the dilution limits, and harmonize relief from certain eligibility requirements.

On July 23, 2026, the CSA published CSA Notice and Request for Comment – Proposed Amendments to National Instrument 45-106 Prospectus Exemptions relating to the Listed Issuer Financing Exemption which sets out proposed amendments to National Instrument 45-106 Prospectus Exemptions and Form 45-106F19 Listed Issuer Financing Document (the “Proposed Amendments”) as well as proposed changes to Companion Policy 45-106CP Prospectus Exemptions (the “Proposed Changes”).

The primary goal of the Proposed Amendments and the Proposed Changes is to codify much of the Blanket Order directly into the instrument, which appears to be due to the success and high frequency of use of the LIFE Exemption – notably, from November 2022 to May 2025 a total of $1.1 billion was raised by a total of 280 issuers, whereas in the 12 months following the Blanket Order (May 2025 to May 2026), 349 issuers raised $3.7 billion, including 40 issuers that raised over $25 million.

Summary of Key Proposed Amendments

1. Codifying the Blanket Order

The Proposed Amendments codify key components of the Blanket Order, as follows:

• Increasing the fundraising cap under the LIFE Exemption to the greater of $25 million and 20% of an issuer’s aggregate market value, subject to a maximum of $50 million within a 12-month period.
• Changing the date for determining the number of outstanding securities for the purposes of calculating the 50% dilution limit to (i) the date of the news release announcing the offering, where the issuer has not completed a prior offering under the LIFE Exemption in the preceding 12 months, or (ii) the date of the news release announcing the first offering completed under the LIFE Exemption in the preceding 12 months.
• Excluding securities issuable upon the exercise of warrants from the dilution calculation where such warrants are not exercisable within 60 days following closing. The practical result is that warrant blockers could be utilized by issuers to increase the maximum amount of dilution permitted, by ensuring any warrants are not exercisable until a minimum of 61 days following closing.

The Proposed Amendments further codify the Blanket Order requirement that a distribution made in reliance on the LIFE Exemption must not result in the creation of a new control person, or in any person or company acquiring beneficial ownership of, or control or direction over, a number of the issuer’s listed equity securities sufficient to entitle such person or company to elect a majority of the issuer’s directors.

2. Sufficiency of Funds Condition

Under the current LIFE Exemption, an issuer must reasonably expect that following the completion of the distribution it will have sufficient funds to meet both its business objectives and liquidity requirements for the subsequent 12 months. This condition has proven to be a significant impediment to smaller issuers seeking to access the LIFE Exemption, as many such issuers are unable to demonstrate that a single offering will provide sufficient capital to fund 12 months of operations. Moreover, the condition creates an incentive for cash-strapped junior issuers to underestimate projected costs and expenditures in order to satisfy the threshold, which in turn can undermine the quality and reliability of the disclosure provided to investors in connection with the offering.

The Proposed Amendments revise the condition so that an issuer must only reasonably expect to have available funds to meet its short-term liquidity requirements. The Proposed Changes provide guidance that (a) for an issuer that has not generated revenue arising in the course of ordinary activities this generally means that the issuer would need to have available funds to achieve its next significant milestone, and (b) for an issuer that has generated revenue arising in the course of ordinary activities, this would generally mean that the issuer needs to have available funds to continue operations for the short term following the distribution, which the CSA generally considers to be 12 months.

The Form 45-106F19 Listed Issuer Financing Document (the “Offering Document”) requires that issuers disclose the business objectives it expects to accomplish with its available funds following completion of the offering, as well as each significant event that must occur for such business objectives to be accomplished. Notably, the Proposed Changes require that non-revenue generating issuers only need to demonstrate that it has available funds to achieve its next significant milestone, rather than to accomplish its stated business objectives in their entirety. In such instances the issuer must also provide an analysis of the issuer’s ability to generate sufficient funds to accomplish each of those business objectives. The practical implication of this distinction is that there may be less certainty that the stated purpose of the funds raised under the LIFE Exemption will ultimately be achieved, as the sufficiency threshold is tied to a single milestone rather than the broader use of proceeds and related business objectives. While we expect that either further regulatory guidance or established market practice will emerge to clarify the scope of this requirement, we note the potential for divergent practices to develop among junior issuers that have not generated revenue.

In addition, the CSA proposes to require enhanced disclosure in the Offering Document regarding the issuer’s financial condition where the issuer’s most recently filed financial statements contain disclosure relating to material uncertainties with respect to going concern, or where there has been a decline in the issuer’s financial condition since the date of its most recently filed financial statements that could reasonably be expected to give rise to such disclosure in its subsequent financial statements. The required disclosure is proposed to include, but not be limited to, the following:

1. the fact that the issuer’s financial statements include uncertainties about going concern or if there is a decline in the issuer’s financial condition, and explain how the offering is anticipated to address any of the material uncertainties that affect the decision on whether a going concern note is included in the issuer’s next financial statements,
2. an analysis of the issuer’s ability to generate sufficient funds to maintain operations on a going concern basis, including a description of the underlying factors and assumptions supporting this analysis as well as any risks and uncertainties associated with the issuer’s ability to generate sufficient funds,
3. the sources of financing that the issuer has arranged but not yet used and describe the circumstances that could affect those sources and that are reasonably likely to occur, and
4. risk factors about the issuer’s financial condition including, as applicable,
   1. the impact of any working capital deficiency, negative cash flow from operating activities and debt levels on the issuer’s ability to remain a going concern, and
   2. any risks of defaulting on payments as they become due, and what effect the defaults would have on the issuer’s operating activities.

3. Certificate Date

The CSA has noted that many issuers mistakenly insert the incorrect lookback date in the certificate in the Offering Document. The Proposed Amendments (a) simplify the certificate so that no date needs to be inserted, and (b) increase the lookback period to 18 months. The new certificate language is as follows:

This offering document, together with any document filed under Canadian securities legislation on or after the date that is 18 months before the date of this Offering Document, contains disclosure of all material facts about the securities being distributed and does not contain a misrepresentation.

Issuers should note that they are subject to potential statutory liability if there is a misrepresentation in an Offering Document. Accordingly, an issuer may be subject to liability if an Offering Document or any continuous disclosure document filed in the preceding 18-month period contains a misrepresentation (which may include an omission) or if such documents fail to disclose all material facts about the securities being offered in the Offering Document.

4. Bulleted Offering Price for Marketed Offerings

Under the Proposed Amendments, issuers are allowed to omit the offering price from the Offering Document, provided that certain conditions are satisfied. The conditions would require that the issuer must file an amended Offering Document containing the omitted information by the earlier of the date on which the purchaser enters into an agreement to purchase the security and the second business day following the determination of the offering price. The purpose of this amendment is to afford greater certainty to issuers, registrants, and investors in the context of marketed offerings.

5. Extended Closing Period

The Proposed Amendments increase the closing window for private placements conducted under the LIFE Exemption from 45 days to 60 days. The CSA notes that numerous issuers have encountered difficulties completing offerings within the existing 45-day timeframe, often resulting in the issuance of a new news release and the filing of a new Offering Document in order to proceed with the offering. In the CSA’s view, a 60-day period strikes an appropriate balance between giving issuers sufficient time to complete their offerings while ensuring that the disclosure contained in the Offering Document remains current. However, note that if a material change occurs with respect an issuer during the 60-day period an issuer must cease the distribution under the LIFE Exemption until it files a news release and material change report disclosing the material change, files an amended Offering Document, and files a news release announcing the filing of the amended Offering Document.

Comment Period and Next Steps

The CSA has included specific questions for stakeholders to consider when making submissions but also invites stakeholders to provide general comments related to the LIFE Exemption. Comments on the Proposed Amendments and Proposed Changes may be submitted at CSA Consultations by October 21, 2026.