The Canadian Accredited Investor Exemption, Explained
The Canadian Securities Commission has established regulations on who is allowed to invest in a private company in Canada - such as the ones we invest in at Brightspark. The law requires that these individuals be “accredited investors”.
The definition of who is an accredited investor is detailed in great length in subsection 1.1 of National Instrument 45-106 – Prospectus Exemption ("NI 45-106"). The definition includes a list of investors such as large financial institutions and government agencies, but we will focus on the criteria that distinguish individuals as accredited investors.
The definition includes a list of investors such as large financial institutions and government agencies, but we will focus on the criteria that distinguish individuals as accredited investors.
Let’s get to it - you may qualify as an accredited investor in Canada if you meet at least ONE of the criteria below:
Income
Your net income before taxes exceeded $200,000 in both of the last two years and you expect to maintain at least the same level of income this year; OR Your net income before taxes, combined with that of a spouse, exceeded $300,000 in both of the last two years and you expect to maintain at least the same level income this year;
Financial Assets
You alone or together with a spouse, own financial assets worth more than $1 million before taxes but net of related liabilities. Cash, or certain investments such as public equity or bonds, would be considered liquid/financial assets.
Net Assets
You, who alone or together with a spouse, have net assets of at least $5,000,000;
This criteria requires that an individual have net assets that count for at least $5 million, with liabilities subtracted. This means that an investor with $4.5 million in real estate and $500,000 in cash may be considered an accredited investor.
Other Criteria
You currently are, or once was, a registered advisor or dealer, other than a limited market dealer.
I'm an accredited investor...What now?
Fantastic! This means that you can invest in early-stage companies with Brightspark. If you haven’t already, join our network and create a free account to browse investment opportunities.
Disclaimer: Below is a list for each of the provincial securities commissions in Canada, which you can refer to for your province's exemptions. However, we recommend you contact the authority in your province directly, or your lawyer, before attempting to invest with Brightspark.
List of Provincial Securities Commissions by Province
British Columbia Securities Commission
Manitoba Securities Commission
Newfoundland Securities Commission
New Brunswick Securities Commission
Nova Scotia Securities Commission
Prince Edward Island Securities Commission
Saskatchewan Securities Commission