The most common exemptions that will be available under NI45-106 are set out below.

Capital Raising Exemptions

• Accredited Investors. Securities of any value will be permitted to be sold on an exempt basis to accredited investors. (The definition of “accredited investor” is very similar to that used in the current Ontario Securities Commission Rule 45-501, Exempt Distributions, and in Multilateral Instrument 45-103, Capital Raising Exemptions, which is in force in most other jurisdictions.) The definition of accredited investor is not completely uniform across the country.
• Private Issuer. Securities, of any value, of private issuers will be permitted to be sold on an exempt basis to a fairly lengthy list of specified investors (including directors, executives and their relatives; existing securityholders; and persons who are not members of the public). A “private issuer” is one whose (a) constating documents (or securityholder agreement) contain restrictions on the transfer of its securities (other than non-convertible debt securities); and (b) securities are owned by not more than 50 persons.
• Family, Friends and Business Associates. Securities of any value will be permitted to be sold on an exempt basis to (a) directors, executive officers and control persons of the issuer or an affiliate of the issuer; (b) founders of the issuer who are currently actively involved in the business; and (c) certain family members, close personal friends and close business associates of the persons listed in (a) and (b). This exemption is not available in Ontario (but see the Founder, Control Persons and Family exemption discussed below).
• Founder, Control Persons and Family. Securities of any value will be permitted to be sold on an exempt basis to (a) founders of the issuer who are currently actively involved in the business (and their affiliates); (b) certain relatives of executive officers, directors and founders of the issuer; and (c) control persons of the issuer. This exemption is available only in Ontario (but see the Family, Friends and Business Associates exemption discussed above).
• Offering Memorandum. Issuers will be permitted to sell securities on an exempt basis if an offering memorandum is prepared in the required form and purchasers sign a risk acknowledgement statement. Purchasers will have a right of action for damages or rescission if the offering memorandum contains a misrepresentation. Ontario has not adopted this exemption. This exemption does not operate uniformly across those jurisdictions that have adopted it. Some jurisdictions limit the amount that can be purchased under this exemption to $10,000 unless the purchaser is an “eligible investor”. To qualify as an eligible investor, an individual must have net assets in excess of $400,000, a net income before tax in excess of $125,000 either alone or together with his or her spouse, or have received advice from an “eligibility advisor”.
• $150,000 Minimum Purchase. Securities will be permitted to be sold on an exempt basis to any purchaser if the securities have an acquisition cost of at least $150,000, paid in cash at closing. Additional investments are not permitted on an exempt basis unless they also have an acquisition cost of at least $150,000.
• TSX Venture Exchange Offering. An issuer listed on the TSX Venture Exchange will be permitted to issue securities on an exempt basis by filing a TSX Venture exchange offering document. This exemption is not available in Ontario.
• Employees, Executive Officers, Directors and Consultants. An issuer will be permitted to issue, or a control person may sell, securities to employees, executive officers, directors or consultants of the issuer and related entities if the individual’s participation in the trade is voluntary. These individuals may also trade among themselves on an exempt basis. (These exemptions are similar to those currently in Multilateral Instrument 45-105, Trades to Employees, Senior Officers, Directors and Consultants, which will be repealed when NI45-106 comes into force.)