Nick Wright, BA JD MBA LLM (Tax)

Wright Business Law

When a Canadian private fund or issuer accepts subscriptions from investors in more than one province, the distribution must be managed on a multi-jurisdictional basis. Sponsors must confirm exemption availability in each province, complete required filings including Form 45-106F1 in each applicable jurisdiction, and assess whether their activities trigger dealer registration obligations under NI 31-103. Distributions involving investors in British Columbia or Alberta require particular attention to provincial filing procedures, investor qualification rules, and solicitation practices. Failure to address these jurisdiction-specific requirements can result in regulatory issues, late fees and remedial action.

Regulatory Framework & Sources of Law

The principal instrument governing prospectus exemptions in Canada is National Instrument 45-106 ‘Prospectus Exemptions’. It applies across all Canadian jurisdictions, including Ontario, British Columbia and Alberta, and establishes the core exempt distribution framework, including definitions (Part 1), prospectus exemptions (Part 2) and reporting requirements (Part 6).

NI 45-106 is a Canadian Securities Administrators (CSA) instrument that has the force of law in each jurisdiction through the local securities’ regulatory framework. In British Columbia and Alberta, it takes effect as a rule of the applicable securities commission under the provincial Securities Act. The instrument is substantively harmonized across jurisdictions, but its application is supplemented by local rules, blanket orders and administrative practices.

In addition to the prospectus exemption regime, registration requirements under National Instrument 31-103 must be considered. Where an issuer or intermediary is “in the business” of trading in securities, registration as an exempt market dealer or in another appropriate category may be required in each jurisdiction where distributions occur.

Local rules remain jurisdiction-specific. British Columbia and Alberta impose their own filing procedures, fee schedules and administrative requirements, including the filing of reports of exempt distribution (Form 45-106F1) through SEDAR+ within prescribed deadlines. A report must be filed in each jurisdiction where a distribution occurs, typically determined by the residence of the purchaser.

Accordingly, the exempt market framework operates on three coordinated levels: the national instrument (NI 45-106), its implementation as binding commission rules in each province, and local procedural requirements governing filings, fees and administrative processes. Fund sponsors conducting multi-jurisdictional offerings must address each layer concurrently.

Definitions & Thresholds

Key definitions and thresholds relevant to cross-province distributions include the following:

A “distribution” is defined under section 1(1) of the Securities Act (Ontario), with materially similar definitions in British Columbia and Alberta. 

Under NI 45-106, the Accredited Investor exemption in section 2.3 applies nationally, including in Ontario, British Columbia, and Alberta. 

The offering memorandum (OM) exemption in NI 45-106, s. 2.9 is also available in Ontario, British Columbia, and Alberta. A material distinction arises from how section 2.9 is structured and applied across jurisdictions. In British Columbia (along with certain other jurisdictions), the exemption is governed by section 2.9(1), which does not impose prescribed investment limits on individual investors. In Ontario and Alberta (among certain other jurisdictions), the exemption is governed by section 2.9(2.1), which imposes investment caps on individuals of $10,000, $30,000, or $100,000 depending on investor status and the involvement of a registrant.

Application in Practice

Applying the framework described above, an Ontario-based fund manager accepting investors in British Columbia or Alberta should proceed as follows:

First, identify the jurisdictions in which investors are located and confirm that the chosen exemption is available and properly applied in each jurisdiction.

Second, prepare subscription materials, investor questionnaires and KYC/AML procedures that reflect jurisdiction-specific requirements. This includes ensuring proper use of risk acknowledgement forms and, in Ontario and Alberta (among certain other jurisdictions), compliance with the applicable investment limits and investor classifications.

For each closing involving investors in Ontario, British Columbia, Alberta, or other applicable jurisdictions, file Form 45-106F1 within the prescribed deadline, covering all applicable jurisdictions and fees. A single report may be filed covering multiple jurisdictions if all purchasers are properly identified and the filing requirements of each jurisdiction are satisfied.

Fourth, assess marketing, solicitation and dealer registration risk under NI 31-103. Where the fund manager or its agents engage in activities directed at investors in British Columbia or Alberta, assess whether those activities trigger dealer registration requirements or require engagement of a registered intermediary in the relevant jurisdiction.

Fifth, harmonise investor communications, offering documents and risk disclosure to meet the most stringent applicable provincial standard.

Common pitfalls include relying on Ontario-only materials without adjusting for jurisdiction-specific requirements, failing to apply the correct version of the exemption in each province, overlooking local filing fees or procedures, and failing to treat a distribution as occurring in the investor’s province of residence, resulting in missed filing obligations.

Grey Areas & Regulator Focus

Several grey zones warrant attention. One classic issue arises when a fund raises capital from multiple jurisdictions via a single closing. Determining which province a particular investor’s “distribution” occurs in may be factual. Regulators may view the investor’s province of residence as where the trade occurs even if the fund is headquartered in another province.

Late or inaccurate Form 45-106F1 filings remain a common regulator focus. CSA Staff Notice 45-308 and related guidance emphasise accuracy and timeliness. Deficiencies often trigger follow-up across multiple jurisdictions.

A fundraising campaign directed at investors in British Columbia, Alberta or another jurisdiction, including investor presentations, roadshows and repeated closings, may satisfy the “in the business” test under securities legislation and NI 31-103 and trigger a requirement to register as an exempt market dealer or to engage a registered dealer in that jurisdiction. This analysis is applied on a jurisdictional basis. Activities directed at investors in a particular province may give rise to registration obligations in that province, even if the issuer or manager is based elsewhere. Regulators in British Columbia and Alberta have identified cross-province fundraising and solicitation practices as an area of focus.

Interactions with Adjacent Regimes

Cross-province fundraising engages overlapping regulatory regimes. Considerations include tax treatment based on investor residence, maintaining books and records that support filings and regulatory review across jurisdictions, and ensuring AML/KYC processes are applied consistently. Cross-border marketing, including roadshows and online solicitations, may also trigger registration and distribution requirements in each province where investors are targeted.

Illustrative Scenarios

An Ontario-based private equity fund completes a closing that includes investors from Ontario, British Columbia and Alberta. For BC investors, the fund relies on the OM exemption under section 2.9(1) of NI 45-106. For Alberta investors, it relies on the Accredited Investor exemption. The fund files a single Form 45-106F1 covering all jurisdictions and pays the applicable provincial filing fees. Following the closing, the British Columbia Securities Commission contacts the issuer to review investor documentation. The issuer had failed to properly obtain or complete the required Form 45-106F4 risk acknowledgement for certain BC investors, resulting in a compliance deficiency under the OM exemption.

A venture fund holds a webinar open to investors across Canada. Included are Alberta residents. The fund uses an OM and accepts subscriptions from Alberta investors. Because for Alberta the OM exemption must include investment limits for non-eligible investors, the fund inadvertently exceeds those limits and triggers a potential breach under Alberta securities rules.

A real estate fund conducts national roadshows, including in British Columbia, and accepts subscriptions from BC residents. The fund limits its compliance analysis to Ontario and does not assess the applicability of British Columbia securities laws, including prospectus exemption conditions and dealer registration requirements under NI 31-103. Following a review by the British Columbia Securities Commission, the fund is required to remediate subscription files for BC investors, correct deficiencies in its reliance on prospectus exemptions, complete and refile reports of exempt distribution with applicable fees and late penalties, and demonstrate that its distribution activities in British Columbia were conducted either in compliance with dealer registration requirements or through a properly registered intermediary.

Compliance Checklist

• Map investor residence jurisdictions
• Confirm NI 45-106 exemptions and provincial variations
• Assess NI 31-103 registration status for each jurisdiction or engage an EMD where required
• Draft offering documents to meet the strictest provincial standard and/or that accommodate differences
• Ensure subscription materials include all required KYC/AML, investor qualification, required risk acknowledgement forms and jurisdiction-specific requirements
• File Form 45-106F1 in each jurisdiction with applicable fees
• Align marketing with the most conservative provincial requirements
• Maintain records of investor residence, exemptions, subscriptions, and filings
• Implement an audit-ready, cross-province compliance process  

What’s Changing

Regulators continue to focus on cross-province fundraising activity. Amendments to National Instrument 45-106 ‘Prospectus Exemptions’, including changes implemented in 2023, have streamlined the reporting of exempt distributions and improved data consistency. With the continued operation of SEDAR+, regulators now have greater visibility into multi-jurisdictional fundraising activity and investor patterns.

At the same time, provincial regulators, including those in British Columbia and Alberta, continue to refine local practices relating to filings, fees and administrative processes. There is ongoing scrutiny of cross-province marketing and solicitation, particularly where digital outreach, webinars or roadshows target investors in multiple jurisdictions. Fund sponsors should monitor jurisdiction-specific filing procedures, deadlines and fee requirements, and ensure that their compliance framework reflects the provinces in which investors are located.

Conclusion & Next Steps

Cross-province fundraising requires coordinated exemption analysis, filing discipline, and registration risk management. Sponsors should ensure exemption eligibility aligns with each province, filings are timely and accurate, registration exposure is assessed, and investor records capture jurisdiction-specific requirements. With disciplined preparation, it is entirely feasible to conduct cross-province fundraising. Without it, the fund may face preventable regulatory exposure, liabilities, or investor-relations issues. Sponsors should establish a jurisdictional compliance roadmap, retain local counsel or dealer support where needed, update subscription materials for each province, and implement ongoing monitoring to reflect provincial rule changes.

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If you are forming, restructuring, or operating a private investment fund in Canada, contact us to schedule an initial consultation with Nick Wright.