The Canadian Accredited Investor Exemption, Explained

Posted by Brightspark on Mar 30, 2017

Note: This post was originally published in March 2017, and was updated in January 2020

An accredited investor is an individual or an entity that is legally permitted by the Securities Commission to invest in certain asset classes such as venture capital funds.

Am I an accredited investor?

There is no “process” to becoming an accredited investor. No registration, exam, form or application is required, and no certificate is issued to confirm your accreditation. Instead, it’s up to the sellers to verify the status of individuals who wish to participate in the investments they offer.

An individual accredited investor meets at least one of the following criteria:


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 ofincome 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. 

"Financial assets” can refer to cash, securities, or a contract of insurance, a deposit or evidence of a deposit that is not a security for the purposes of securities legislation.

Net Assets

You, who alone or together with a spouse, have net assets of at least $5,000,000; 

Net worth includes all of your fixed and liquid assets, cash, investments, and real estate – with liabilities subtracted.

Other Criteria

You currently are, or once was, a registered advisor or dealer, other than a limited market dealer. Note that you may also be able to invest as a corporation, granted that you are the authorized signatory of that corporation and that the corporation itself is accredited.

If you’re unsure whether you qualify as an accredited investor, we recommend that you consult with your lawyer and/or Provincial Securities Commission - we included a full list at the bottom of this article.


Why are certain investments restricted to accredited investors?

The accredited investor criteria and the related restrictions are designed to protect investors and ensure that only those suited for high risk-high reward investments are able to do so. The criteria established by the Securities Commission ensures that investors have the ability to withstand financial loss, and the financial resources to obtain expert advice if needed.


I'm an accredited investor...What now?

This means that you have access to certain investment opportunities, such as venture capital funds made accessible through Brightspark.

You should also ensure that the investment that you make is suitable for you. Every asset class is unique in terms of time horizon, liquidity, and expertise required – ask yourself whether they fit with your personal investment objectives and risk tolerance.

If you have questions about whether venture capital investments are right for you - we invite you to schedule a discovery call with our Investor Relations team


Still have questions? Ask your Provincial Securities Commission

Below is a list of each of the provincial securities commissions in Canada, where you can find more information about your province's exemptions. We recommend that you contact the authority in your province directly, or your lawyer if you’re unsure whether you qualify.

List of Provincial Securities Commissions by Province

Alberta Securities Commission

British Columbia Securities Commission

Manitoba Securities Commission

Newfoundland Securities Commission

New Brunswick Securities Commission

Nova Scotia Securities Commission

Ontario Securities Commission

Prince Edward Island Securities Commission

Quebec Securities Commission

Saskatchewan Securities Commission

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