On May 14, 2025, the Canadian Securities Administrators (the CSA) issued Coordinated Blanket Order 45-935 (the Blanket Order), introducing targeted relief from certain limitations of the Listed Issuer Financing Exemption (the LIFE Exemption) under Part 5A of National Instrument 45-106 – Prospectus Exemptions (NI 45-106). The Blanket Order materially enhances the flexibility of the LIFE Exemption by raising the financing limits available to eligible listed issuers and streamlining aspects of its application. The result is a more competitive and accessible capital raising framework for Canadian public companies.

Background

First introduced in 2022, the LIFE Exemption has served as an innovative and cost-effective fundraising tool for Canadian reporting issuers listed on a recognized stock exchange. By allowing the distribution of freely tradeable securities without a prospectus—based on the issuer’s existing continuous disclosure record and Form 45-106F19, a short offering document—issuers can reach both retail and institutional investors with fewer regulatory hurdles and lower transaction costs.

In its first two years of operation, the LIFE Exemption proved particularly attractive for small and mid-cap companies, helping issuers raise over $1 billion in aggregate.¹ However, the limited financing thresholds and dilution restrictions originally imposed constrained broader adoption. The Blanket Order directly addresses these constraints and opens the door for expanded use of the LIFE Exemption across the market.

Summary

The Blanket Order does not establish a new standalone exemption. Instead, it modifies the existing LIFE Exemption by relaxing certain core conditions—most notably those relating to capital limits and dilution calculations. Eligible issuers can now choose to rely on these modifications, subject to a defined set of conditions.

Highlights include:

• Increased capital raising capacity, with significantly higher thresholds than the original exemption. Listed issuers can raise the greater of (i) $25 million, and (ii) 20% of the aggregate market value of their listed securities, to a maximum of $50 million, in any 12-month period relying on the Blanket Order.
• A more lenient dilution calculation methodology, easing structural planning for warrant-linked offerings. Only warrants exercisable within 60 days of closing must now be included when calculating the 50% dilution cap.
• New investor eligibility restrictions, aimed at maintaining public company governance norms. Issuers must ensure the offering does not result in a new control person or grant any investor the ability to elect a majority of the board.
• The ability to combine the Blanket Order with the original LIFE Exemption, with conditions clarified below.

These changes aim to revitalize the exempt markets and reduce administrative and financial burdens for public issuers while preserving investor protection.

The Blanket Order: Key Features

The Blanket Order introduces several significant changes to the LIFE Exemption framework, enhancing its utility while maintaining important investor protection safeguards. These changes pertain primarily to the maximum capital raising thresholds, dilution calculations, and the eligibility of investors under expanded financings.

Increased Capital Raising Limits

Perhaps the most impactful change under the Blanket Order is the substantial increase in the amount of capital an issuer may raise in reliance on the LIFE Exemption. Specifically, eligible issuers may now raise the greater of $25 million or 20 percent of the aggregate market value of their listed equity securities, up to an absolute cap of $50 million in any rolling 12-month period. This represents a fivefold increase from the original LIFE Exemption limits, which permitted issuers to raise only the greater of $5 million or 10 percent of market capitalization, subject to a maximum of $10 million.

This expansion materially broadens the financing options available to small and mid-sized public companies, allowing them to access a greater pool of capital more efficiently and without the regulatory burden of a prospectus offering.

New Methodology for Dilution Calculations

In addition to increased financing capacity, the Blanket Order introduces a refined methodology for assessing dilution, particularly relevant to issuers conducting unit offerings that include warrants. Under the original LIFE Exemption, the dilution threshold required issuers to account for all securities issuable upon the exercise of warrants, regardless of their maturity. In contrast, the Blanket Order provides that only warrants that are exercisable within 60 days of the closing of the offering must be included when calculating the 50 percent dilution limit.

Further, the timing reference point for the dilution calculation now depends on whether the issuer has conducted a prior LIFE Exemption offering in the previous 12 months. If the issuer has not closed a prior offering during this period, the dilution limit is measured against the issuer’s outstanding listed equity securities as of the date of the current news release announcing the offering. However, if the issuer has completed one or more LIFE offerings in the prior 12 months, the dilution calculation must aggregate all such distributions and measure them against the issuer’s outstanding equity as of the date of the first prior LIFE offering within that 12-month period.

These modifications provide issuers with greater structural flexibility, particularly when implementing multi-tranche or warrant-based financings.

New Restrictions on Investors

To safeguard against unintended changes in corporate control, the Blanket Order imposes specific limitations on investor outcomes. An issuer relying on the enhanced relief must ensure that the distribution does not result in the creation of a new control person, nor may it result in any person or company acquiring beneficial ownership or control over securities sufficient to elect a majority of the issuer’s directors.

These restrictions serve as a check against concentrated ownership arising from exempt distributions and are unique to the Blanket Order. They do not apply where an issuer elects to proceed solely under the original LIFE Exemption.

Interaction Between the LIFE Exemption and the Blanket Order

Issuers have the flexibility to rely on the original LIFE Exemption under NI 45-106 or the LIFE Exemption as varied by the Blanket Order. Importantly, if any aspect of the Blanket Order is used (e.g., higher financing limits or relaxed dilution mechanics), all of its conditions apply, including the restrictions on control and board appointment rights.

U.S. Offerings

Unlike the Canadian regulatory framework, U.S. securities laws do not provide an equivalent exemption to the Listed Issuer Financing Exemption (LIFE Exemption). As such, Canadian issuers seeking to raise capital from U.S. investors under a LIFE-based offering must instead rely on an available exemption from registration under the U.S. Securities Act of 1933.

Commonly used exemptions include:

1. Rule 144A, which permits resales to U.S. qualified institutional buyers;
2. Rule 506(b) of Regulation D, which allows for private placements to accredited investors without general solicitation; and
3. Rule 506(c) of Regulation D, which permits offerings to accredited investors using general solicitation, provided that the issuer takes reasonable steps to verify accredited investor status.

A more detailed discussion of these exemptions, along with related U.S. disclosure and structuring considerations, is available in our earlier publication: One Year with the Listed Issuer Financing Exemption.

More recently, Rule 506(c) has become increasingly attractive to Canadian issuers due to recent regulatory relief. On March 12, 2025, the U.S. Securities and Exchange Commission issued a no-action letter clarifying and expanding the methods by which issuers can verify an investor’s accredited status under Rule 506(c). Under this guidance, issuers may now:

• Rely on minimum investment thresholds—such as $1 million for entities or $200,000 for individuals; and
• Accept written representations from investors, provided the issuer has no actual knowledge to the contrary.

This marks a notable shift away from the historically onerous verification process, which often required submission of tax returns, bank statements, or third-party attestations. The result is a more efficient and less intrusive onboarding process for issuers conducting cross-border offerings, potentially enhancing the appeal of concurrent U.S. placements under Rule 506(c) when raising capital under the LIFE Exemption.

Looking Ahead

The Blanket Order is a welcome enhancement to the exempt markets regime. By lifting funding limits and aligning regulatory requirements more closely with market realities, the CSA has equipped public issuers with a more powerful and flexible capital raising tool. Issuers planning exempt distributions in the coming quarters should assess whether the Blanket Order could optimize their financing strategy.

If you have questions about structuring a financing under the LIFE Exemption, relying on the Blanket Order, or conducting a cross-border offering, please contact a member of our Capital Markets group.