Generally, securities offered to the public in Ontario must be issued with a prospectus, but there are exemptions. The definition of eligible investor is only used in the Offering Memorandum (OM) Exemption. While the exemption allows any investor to buy securities, there are investment limits which apply depending on whether the investor is an individual or not, and whether the investor is an eligible investor.
An eligible investor is a person with net income or net assets that exceed the amounts set out in the exemption. An investor that does not meet the definition of an eligible investor is a non-eligible investor. A non-eligible investor can also buy securities under the exemption however, non-eligible investors are subject to lower investment limits than eligible investors in some jurisdictions. The criteria for individuals who meet certain income or financial asset thresholds in addition to investment limits are set under National Instrument 45-106. You may wish to review a Summary of Key Capital Raising Prospectus Exemptions in Ontario.
These previous Investing Questions questions may help to provide further insights:
- “What are the criteria to qualify as an eligible investor under the new OM Exemption?”
- “What is and what are the criteria to participate in the exempt market?”