Strengthening Canadian capital markets amid Canada-U.S. trade tensions

The re-election of U.S. President Donald Trump has altered U.S.-Canada trade relations, with Trump's tariffs and other trade measures disrupting the Canadian economy and capital raising. In response, Canadian securities regulatory authorities have introduced a series of initiatives aimed at strengthening capital markets amidst ongoing global economic uncertainty. Cumulatively, these initiatives streamline and expand capital raising options for issuers, incentivize companies to go public in Canada and broaden investor participation in financing opportunities. These regulatory reforms, combined with a resurgence in precious metals and interest rate cuts, have created an environment for Canadian capital markets to thrive in 2025. Canada led the top 10 largest global equity markets by capitalization, with a 36.5% total return. Further, the S&P/TSX Composite Index was up 32% by year-end, ahead of the S&P 500's 14% return. Continued growth in Canadian capital markets is expected in 2026.

Expansion of capital raising limits under the Listed Issuer Financing Exemption

In November 2022, the Canadian Securities Administrators (CSA) introduced the Listed Issuer Financing Exemption ("LIFE") under National Instrument 45-106.  This exemption enabled listed issuers listed on recognized exchanges who have filed required disclosure documents to raise up to C$10 million in capital without filing a full prospectus. On May 14, 2025, the CSA expanded the limits on capital-raising under the exemption in efforts to facilitate more efficient capital raising and promote company growth. Through Coordinated Blanket Order 45-935, listed issuers may now raise the greater of C$25 million and 20% of the aggregate market value of their listed securities to a maximum of C$50 million in a 12-month period. The number of LIFE offerings has risen significantly since the amendment, and issuer reliance on the exemption is expected to continue in 2026.

CSA blanket orders

Effective April 17, 2025, the CSA implemented three blanket orders aimed at reducing regulatory hurdles in capital raising and supporting the competitiveness of Canadian capital markets. The Prospectus and Disclosure Blanket Order (Coordinated Blanket Order 41-930) permits issuers to omit audited financial statements for the third most recently completed financial year in their Initial Public Offering (IPO) prospectuses, circulars and material change reports. These changes aim to reduce the costs of going public by streamlining disclosure requirements.

The New Reporting Issuer Blanket Order (Coordinated Blanket Order 45-930) facilitates a more efficient process for going public through an underwritten IPO. New reporting issuers may utilize a prospectus exemption for the 12-months immediately following their underwritten IPO prospectus, subject to certain conditions. Within this 12-month period, the issuer is permitted to distribute up to the lesser of C$100,000,000 or 20% of the aggregate market value of their listed equity securities on the date the issuer announces the first offering under the exemption. Issuers are still required to file an offering document that includes disclosure of any material fact relating to the securities and a description of the issuer's business objectives.

Lastly, under the Offering Memorandum Blanket Order (Coordinated Blanket Order 45-033), individual investors who do not meet the definition of "accredited investor" may be exempt from the 12-month C$100,000 investment limit under the existing offering memorandum exemption. Additionally, re-investment of the proceeds of an investment disposition in the same issuer will no longer count towards the investment limit if the investor receives advice from a register dealer or adviser that the investment is suitable for the investor. This order aims to facilitate capital raising for issuers and broadens investor participation in exempt-market opportunities.

Change to escrow under TSX-V Policy 5.4

To further incentivize going public in Canada, the TSX Venture Exchange (TSX-V) introduced amendments to Policy 5.4 - Capital Structure, Escrow and Resale Restrictions. Effective June 2, 2025, the amendments reduce the escrow burden by eliminating the TSX-V's Surplus Securities escrow regime relating to certain securities as part of a new listing. Instead, these securities will be escrowed according to the Value Securities release schedules, which provide timelines for when the securities can be sold publicly based on the issuer's tier. Under the schedules, the term of escrow remains at 18 months for Tier 1 issuers and 36 months for Tier 2 issuers. However, there will no longer be releases that are more heavily weighted to later in the term.

Proposed harmonized multilateral Self-Certified Investor Prospectus Exemption

To broaden investor participation, the CSA has proposed to adopt Multilateral Instrument 45-111 Self-Certified Investor Prospectus Exemption. The exemption would enable self-certified investors to invest up to C$50,000 per calendar year across multiple businesses. To qualify as a self-certified investor, individuals would be required to meet one of the proposed criteria, which include employment history, degree, designation and examination requirements. If adopted, the exemption would further enhance capital formation opportunities for Canadian businesses and expand investment access. The comment period on the proposed exemption closed on Jan. 5, 2026.

Conclusion

Amid heightened economic uncertainty driven by U.S. tariffs and other trade measures, Canadian securities regulators have taken meaningful steps to strengthen capital markets by facilitating streamlined capital-raising opportunities. These initiatives align with the priorities in the Federal Budget 2025, which emphasizes a focus on supporting capital markets and directing investments towards Canadian companies and projects to fuel economic growth. Further, the CSA's 2025-2028 Business Plan also aims to enhance Canada's international capital market competitiveness by reducing regulatory hurdles and facilitating the use of emerging technologies. Anticipated initiatives include eliminating certain financial reporting requirements for issuers and modernizing mineral project disclosure standards. As a result, continued Canadian capital market reforms are expected in 2026.