CSA Blanket Orders and the Rise of Alternative Fundraising

On April 17, 2025, the Canadian Securities Administrators (“CSA”) published a series of coordinated blanket orders (the “Blanket Orders”) in recognition of the current uncertainty of global markets and to support Canada’s capital market activity in particular. The Blanket Orders consist of: (1) Coordinated Blanket Order 41-930 Exemptions from Certain Prospectus and Disclosure Requirements (“First Blanket Order”); (2) Coordinated Blanket Order 45-930 Prospectus Exemption for New Reporting Issuers (“Second Blanket Order”); and (3) Coordinated Blanket Order 45-933 Exemption from the Investment Limit under the Offering Memorandum Prospectus Exemption to Exclude Reinvestment Amounts (“Third Blanket Order”).

The Blanket Orders aim to enhance the attractiveness of the Canadian capital markets by fostering a more dynamic and competitive market environment that streamlines regulatory requirements for issuers (including reducing the time and costs associated with preparing disclosures related to prospectus filings, restructuring transactions and bids).

Context and Trends

The number of initial public offerings (“IPOs”) has faced a sharp decline since 2021 both in Canada and the United States. This, together with an increase of the number of privatizations during the same period, contributes to the desire to create more favorable conditions to encourage IPOs and increase the number of public issuers.

Markets have also more recently been marked by a growing sentiment of uncertainty triggered notably by the back-and-forth regarding tariffs, recession risks and other macroeconomic issues. This resulted in an early slowdown in M&A activity globally since the beginning of 2025, as it becomes more and more challenging to value businesses and form views on future outlook in certain sectors. As private equity investors who have been very active market participants of late continue to seek exit opportunities, the IPO alternative may become more attractive again as compared to M&A transactions which have been the preferred route over the last years.

The Blanket Orders

The First Blanket Order

Exemptions from Certain Prospectus and Disclosure Requirements

The First Blanket order provides exemptions from certain requirements in National Instrument 41-101 under Form 41-101 General Prospectus Requirements.

Third-Year Historical Financial Statements: The First Blanket Order exempts issuers from including third-year historical financial and operating statements in their prospectus, including the statement of comprehensive income, statement of changes in equity, statement of cash flows, and operating statement for oil & gas acquisitions. This exemption applies to IPO prospectuses and extends to certain circulars and material change reports, namely the following: Form 51-102F3 Material Change Report, Form 51-102F5 Information Circular, Form 62-104F1 Take-Over Bid Circular and Form 62-104F2 Issuer Bid Circular. The foregoing is particularly beneficial for smaller companies and startups, which often face significant challenges in meeting stringent financial reporting requirements. By alleviating these burdens, the CSA aims to encourage more companies to consider public offerings as a viable option for raising capital.

Standard Term Sheets and Marketing Materials During the Waiting Period: The First Blanket Order also now allows standard term sheets and marketing materials provided during the waiting period between the preliminary and final prospectus to include specified pricing information, such as the price, number, and total dollar amount of offered securities. This is permitted if the issuer issues a news release containing the specified pricing information and all other information is derived from the preliminary prospectus.

Promoter Certificate Exemptions: The First Blanket Order further exempts issuers from including a promoter certificate in a prospectus if the promoter signs a certificate in another capacity. In Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick and Nova Scotia, issuers that have been reporting for at least 24 months and where the promoter is not a director, officer, or control person are also exempt from this requirement.

The Second Blanket Order

New Reporting Issuer Blanket Order

The Second Blanket Order provides a prospectus exemption to new issuers to raise additional capital following an IPO under certain conditions, facilitating easier access to capital markets. More specifically it provides a prospectus exemption to new reporting issuers during the 12 months following an underwritten IPO. It allows issuers to distribute up to the lesser of $100,000,000 or 20% of the market value of their listed equity securities without a prospectus. To do so, issuers must issue a news release and prepare an offering document before soliciting offers to purchase. The offering document must include the following: details of the offering, disclosure of any material fact relating to the securities being distributed that has not already been disclosed, a description of the issuer’s business objectives, recent developments, and use of proceeds, and a contractual right to cancel the agreement to purchase within two days of purchase, and a right of rescission or action for damages in case of misrepresentation. The prospectus exemption is designed to streamline the process for companies looking to expand their operations and attract investment post IPO.

The Third Blanket Order

Offering Memorandum Blanket Order

The Third Blanket Order provides time-limited relief from the investment limit requirements under the offering memorandum exemption of Section 2.9 of National Instrument 45-106. It essentially provides that the re-investment of proceeds of disposition would not be counted towards the 12-month $100,000 investment limit. This relief is subject to certain conditions, notably that the investor receive advice from a registered dealer or registered advisor that the reinvestment and any new investment under the offering memorandum exemption remain suitable for the investor. This effective increase in investment limit is aimed at fostering a more inclusive investment environment and enabling investors to participate more in certain exempt (private) financing opportunities.

Conclusion: IPOs and Their Future

Critics have argued that in order to increase the IPO landscape in Canada, fixed regulatory costs should be reduced or removed and all regulations should be reviewed and analyzed with the goal of reducing the regulatory burden applicable to becoming and remaining a public company.  Additionally, the regulatory and legislative environment in Canadian jurisdictions, which is perceived as being rather “activist friendly”, has led some companies to prefer going public in the UK or the US where regulations are seen as relatively more favorable to issuers. These observations underscore the importance of ongoing regulatory and legislative reform as a way to enhance the attractiveness of the Canadian capital markets to keep and attract more public issuers.

It remains to be seen if such coordinated efforts will increase IPOs in 2025 and beyond. The success of these most recent measures will depend in part on their ability to address some of the underlying challenges faced by companies and investors, and to foster a more competitive and dynamic market environment. With alternative financing opportunities on the rise, more regulatory and legislative reforms may be required to maintain and increase Canada’s attractiveness as a public company destination.

For further information regarding the Blanket Orders, we invite you to contact a member of our Capital Markets Group.