The securities division of The Manitoba Securities Commission protects investors and promotes fair and efficient capital markets throughout the province by conducting operations including registrations, processing of applications and prospectuses, preparing matters for the referral to the Commissioners and conducting investigations, prosecutions and other hearings.
This section explains the exemptions available to enable distribution of securities without a prospectus.
This section is a general summary of the law only. You should not rely on this information alone to sell securities. Before selling securities, review the full text of the law and obtain professional legal advice.
The Securities Act requires that securities be sold using a prospectus and the services of a person who is registered with the MSC. However, the Act sets out ways a business can raise money by selling securities without the need for a prospectus or a registered dealer. These methods are referred to as exemptions from the prospectus and registration requirements.
Businesses selling securities under an exemption must carefully follow every requirement to qualify for the exemption, and anyone who plans to sell securities using an exemption is strongly urged to get professional legal advice before approaching potential investors. It may be an offence under The Securities Act to sell securities without complying with an exemption, unless the sale is made by a registered dealer using a prospectus.
Do not begin asking people to invest until you have met all the requirements for an exemption. In some cases, you must notify us before you can approach potential purchasers.
There are exemptions that are available in most of Canada (see “National Exemptions”), as well as exemptions available only in Manitoba (see “Provincial Exemptions”).
Commonly used exemptions available in all Canadian jurisdictions under National Instrument 45-106 include:
Part 2 of National Instrument 45-106, which permits securities to be sold:
to an Accredited Investor (section 2.3)
by a Private Issuer (section 2.4)
to family, friends and business associates (section 2.5)
by using an offering memorandum
Part 6 of National Instrument 45-106 which sets out when forms are required to be filed with the MSC.
Filers must pay a fee of $25 to the MSC to file a Report of an Exempt Trade (Form 45-106F1), as well as a fee of $650 to file an Offering Memorandum (Form 45-106F2 or Form 45-106F3).
National Instrument 45-106 provides for other exemptions in specific circumstances. Each of these exempt offerings has specific requirements for, and limits on, who can purchase the securities using each exemption.
The following two exemptions are available in Manitoba only:
Section 91(a) Regulation
Sale of securities to a specific group of purchasers is permitted. These purchasers either have knowledge of the business they are investing in or have received professional advice about the investment. This exemption is suitable for a new or developing business and can be used only once.
This exemption is generally used by a new business or a private company that changes its articles of incorporation to be able to offer securities to the public.
What document is used to offer the securities for sale?
No specific type of offering document is required, but information provided to a purchaser must not be misleading.
Who can purchase the securities?
Related purchasers and/or no more than 15 informed purchasers.
How long can I sell securities using this exemption?
You can sell securities under this exemption for a maximum of 180 days following the date that a notice (Form 23 of the regulations) is filed with the MSC. The exemption can be used only once.
What documents need to be filed with the MSC?
File a Notice of Intention to Trade in a Security (Form 23 of the regulations) with the MSC to start offering the securities.
At the end of the offering (no later than 15 days after the end of the 180-day offering), file
a report describing what was sold (Form 27 of the regulations) and
a declaration from each purchaser (Form 24 of the regulations).
What are the fees?
There is a $650 fee to file Form 23, Notice of Intention to Trade in a Security.
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Section 91(b) Regulation
Sale of securities to a specified type of purchaser is permitted using an Offering Memorandum, which provides the potential investor with information required to make an investment decision. The MSC does not review Offering Memorandums.
This exemption is generally used by businesses that are not in a position to issue a prospectus, but have been in operation long enough to develop a business history.
What document is used to offer the securities for sale?
An Offering Memorandum is required. The contents of the memorandum are set out in Form 26 of the regulations. Information provided to a purchaser must not be misleading.
Who can purchase the securities?
Related purchasers and/or up to 50 purchasers.
How long can I sell securities using this exemption?
You can sell securities under this exemption for a maximum of 180 days following the date that a notice (Form 23 of the regulations) is filed with the MSC. The exemption can be used more than once, but there must be at least 180 days between securities offerings.
What documents need to be filed with the MSC?
File a Notice of Intention to Trade in a Security (Form 23 of the regulations) with the MSC to start offering the securities.
At the end of the offering (no later than 15 days after the end of the 180-day offering), file
a report describing what was sold (Form 27 of the regulations) and
a declaration from each purchaser (Form 25 of the regulations).