FAIR Canada recently submitted feedback to provincial securities regulators on a proposal that would allow individuals to invest in the exempt or private markets by “self-certifying” their education or work experience and signing a risk acknowledgement form. This process would permit issuers to distribute securities without providing them with the benefits and protections of a prospectus.
When developing this prospectus exemption, we emphasized the need for:
- Clear qualification criteria, so firms and issuers cannot stretch or misinterpret who is eligible
- Guidance on dealers’ core obligations — including Know Your Client, Know Your Product, suitability, and client-first duties — especially where annual investment limits apply
- Data collection and review, so regulators can determine whether the exemption meets its intended objectives without eroding investor protections
- Public reporting of compliance issues related to this exemption
Why it matters: Prospectus exemptions facilitate capital raising and increase access to exempt and private market investments but reduce disclosure and safeguards. The self-certified exemption should be limited to individuals who possess the genuine knowledge and experience necessary to protect themselves. Our recommendations aim to help regulators maintain the right balance between capital formation and investor protection.
Read our full comment letter here.