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OSC Activates 3 New Interim Class Orders to Boost Early-Stage Capital

Capital Raising | May 13, 2024

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The Ontario Securities Commission Publishes Three (3) New Interim Class Orders to Bolster Early-stage Capital Raising

The Ontario Securities Commission (OSC) has published three new interim class orders to foster capital formation, offering targeted relief and clear directives to specific groups within Ontario’s financial ecosystem. Effective May 9, 2024, these orders address not-for-profit angel investor groups, early-stage businesses, and streamline reporting processes under the self-certified investor prospectus exemption. Here, we break down the essential features and limitations of each order, clarifying their purpose, target audience, and anticipated impact on the markets.

Grant Vingoe, Chief Executive Officer of the OSC:

“New and growing businesses play an essential role in our economy, contributing to job creation and driving productivity gains through innovation and competition.  These initiatives reflect the OSC’s commitment to fostering the conditions for growth and innovation in Ontario’s capital markets without compromising investor protection, as outlined in our recently released strategic plan.”

1. Ontario Instrument 32-508: Not-For-Profit Angel Investor Group Registration Exemption

  • Tailored for Ontario-based not-for-profit angel investor groups that support early-stage businesses by connecting them with potential angel investors.
  • This exemption allows not-for-profit angel investor groups to facilitate investments without registering as dealers. It permits these groups to identify Ontario early-stage businesses, introduce them to their members, and organize regular presentations and due diligence sessions without the stringent requirements typically associated with dealer activities.

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  • The group must operate on a not-for-profit basis within Ontario, with no more than 500 members who must all be either accredited or self-certified investors. The exemption restricts groups from engaging in public advertising, preparing offering documents, or handling investment transactions directly.
  • By reducing the regulatory load on these groups, the OSC facilitates a more robust support structure for startups, potentially increasing the flow of capital to innovative ventures and accelerating economic growth.

2. Ontario Instrument 32-509: Early-Stage Business Registration Exemption

  • Designed for early-stage businesses in Ontario looking to raise initial capital through direct marketing and simplified capital-raising activities.
  • This exemption enables eligible early-stage businesses to engage in capital-raising activities directly, such as through online promotions and during demo days, without needing to register as dealers. It allows businesses to raise up to $3,000,000 from accredited and self-certified investors.
  • Businesses must be headquartered and operational in Ontario, not previously involved in securities fraud or violations, and cannot compensate anyone for finding investors unless through a registered dealer. They are also capped at raising $3 million under this exemption and must adhere to strict reporting and advertising guidelines.
  • This exemption lowers the barrier for entry for startups, enabling easier access to necessary funds which can help them scale rapidly and contribute to the local economy.

3. Ontario Instrument 45-509: Report of Distributions under the Self-Certified Investor Prospectus Exemption

  • Aimed at issuers utilizing the Self-Certified Investor Prospectus Exemption, facilitating capital raising from investors who can independently assess and understand investment risks.
  • This order simplifies the reporting requirements for issuers raising capital under the Self-Certified Investor Prospectus Exemption. Rather than the comprehensive reporting typically required, issuers can now utilize a streamlined, quarterly report without associated fees.
  • The simplified reporting applies only to distributions reported under the specific Self-Certified Investor Prospectus Exemption and must adhere to the framework set by the OSC, which limits the scope to specific types of investors and transactions.

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  • By reducing the complexity and frequency of required reporting, the OSC encourages more issuers to opt for this exemption, fostering greater investment opportunities and reducing administrative burdens on emerging businesses.

Leslie Byberg, Executive Vice President, Strategic Regulation:

“The OSC TestLab initiatives will provide important insights as we work to support access to finance at all stages of business growth. The data and information collected will help inform future policymaking, including promoting access to capital for early-stage businesses in Ontario while also ensuring investor protections.”


These interim class orders from the OSC are designed to reduce regulatory impediments and support innovative financing structures. Each order is crafted with specific features and limitations to ensure the balance between capital formation and investor protection. As these initiatives unfold, they are anticipated to help improve Ontario’s economic landscape by enabling more capital-raising pathways for early-stage businesses.

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