In a move aimed at invigorating capital markets, the Canadian Securities Administrators (“CSA”) have implemented a substantial increase in the capital-raising limits under the Listed Issuer Financing Exemption (“LIFE” or “LIFE Exemption”) in Part 5A of National Instrument 45-106 – Prospectus Exemptions. This expansion of the LIFE Exemption, which follows the CSA’s Coordinated Blanket Order 45-935 – Exemption from Certain Conditions of the Listed Issuer Financing Exemption (the “Blanket Order”), became effective on May 15, 2025. LIFE is designed to enhance issuer access to capital in a cost-effective and timely manner while upholding investor protection.
LIFE in Context
Launched in November 2022, LIFE was introduced by the CSA as an efficient capital-raising option for issuers that have been reporting issuers for at least 12 months, are listed on a Canadian stock exchange, and have filed all timely and periodic disclosure documents required under Canadian securities legislation.
Rather than preparing a prospectus, the issuer is only required to file a short-form offering document (Form 45-106F19, which does not require approval from a securities regulatory authority) and issue a news release announcing the offering. Moreover, securities issued under the LIFE Exemption are not subject to the typical four-month hold period under National Instrument 45-102 – Resale of Securities and are available to all investor types.
However, the LIFE Exemption is not available to investment funds or issuers that have no active business operations or whose principal asset is cash or a stock exchange listing, such as a capital pool company, special purpose acquisition company, or any similar entity.
Since its implementation, the exemption has been utilized by over 270 issuers, resulting in more than C$1 billion in capital raised, according to the CSA. While the response from market participants has been largely positive, many have noted that the previous capital-raising limits curtailed broader use of the exemption.
Key Changes
Under the revised rules, eligible issuers may now raise the greater of $25 million or 20% of the aggregate market value of their listed securities up to a maximum of $50 million in a 12-month period. This is a significant increase from the prior limits under the exemption, which were the greater of $5 million or 10% of the issuer’s aggregate market value, capped at $10 million.
Despite these enhanced thresholds, the LIFE Exemption remains subject to the condition that the distribution will not result in an increase of more than 50% of the issuer’s outstanding listed equity securities during the relevant 12-month period.
The Blanket Order has also clarified the timing for calculating the dilution limit:
- If the issuer has not relied on the LIFE Exemption or Blanket Order in the past 12 months, the dilution limit is calculated based on the date of the news release announcing the offering; or
- If the issuer has completed a first offering under the LIFE Exemption or Blanket Order within the past 12 months, the dilution limit is based on the date of the news release announcing that offering.
Moreover, securities issuable on the exercise of warrants can be excluded from the dilution calculation if they are not convertible within 60 days of the offering’s closing date.
While the LIFE regime streamlines capital raising for eligible issuers, certain critical distribution restrictions remain. Specifically, the offering must not result in the creation of a new control person or grant any individual or entity acquiring beneficial ownership of securities the right to elect a majority of the issuer’s board of directors. It is also important to note that proceeds raised under the LIFE Exemption may not be used for significant acquisitions, restructuring transactions, or any other transaction requiring securityholder approval.
Conclusion
Amid ongoing headwinds in capital markets, the expanded LIFE Exemption demonstrates a pragmatic response from the CSA to enhance the overall competitiveness of raising capital in Canada. In contrast to a prospectus, the LIFE Exemption imposes relatively few regulatory burdens, requiring only a short-form offering document, a comprehensive news release, and an up-to-date continuous disclosure record. The issuer is responsible for ensuring eligibility and compliance with all other exemption conditions, without requiring regulatory review or approval. Its key limitations—such as the dilution and monetary thresholds, the use of proceeds restrictions, and the requirement for an active business—strike a well-crafted balance between facilitating capital formation and safeguarding investor interests. While more prominent listed issuers may welcome the increased availability of LIFE, its impact on venture issuers, particularly those trading at low share prices, may remain limited, as the 50% dilution threshold can be quickly reached in such cases, effectively restricting access to the full increased limits.