Companies and investment funds may look for ways to raise capital from investors in exchange for issuing securities such as sharesA share, also referred to as stock, is an equity security that entitles you to an ownership interest in a company.
The company can distribute a portion of its earnings to shareholders by paying them a dividend.
The shares of companies listed on an exchange are bought and sold at the exchange.
When a company ceases to operate, the proceeds from the sale of its assets are used to pay its debts and taxes, and the rest of the money is distributed to shareholders.
, units or bondsA bond is a security issued by governments and companies through which an investor lends money to the issuer.
In general, the government or company promises to pay the investor interest at a fixed rate and at certain intervals (for example, 2% per year). Interest is normally paid twice a year. At maturity, the government or company pays back a predetermined amount that is called the face value. The face value is usually $1,000.
There are several types of bonds:
Stripped bondReal return bondConvertible bondSavings bondRetractable bondUnsecured bondEtc. 
. As a general rule, in Québec they must first file a prospectus with the AMF.

A prospectusA prospectus is a detailed information document that a company must prepare to be able to sell securities (such as shares) to the public.
It must provide full, true and plain disclosure of all material facts likely to affect the value or market price of the security in question.  
is a document containing detailed information about a company’s:

  • Securities being distributed
  • Activities
  • Management
  • Financial position

The information contained in the prospectus is intended to help you make an informed investment decision.

Preparing a prospectus can be costly and time-consuming. Under certain conditions, companies can obtain authorization that dispenses them from preparing a prospectus. This is called an “exemption.”


A prospectus is not required for the distribution of certain securities, including government bonds and certificates of deposit guaranteed by deposit insurance.

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Main prospectus exemptions

A company can obtain a prospectus exemption if it:

  • Issues securities to accredited investors;
    These investors have above-average income or substantial assets. Certain institutions are also considered to be accredited investors, including banks, governments, registered dealers and advisers, insurance companies and pension funds. An accredited investor may resell his securities to another accredited investor.
  • Is a “private issuer;”
    The company can’t be an investment fund. It can’t have more than 50 investors meeting specific criteria. (However, this number excludes current and former employees.)
  • Issues securities to individuals who know the company;
    This includes executive officers, directors, certain close family members, friends or business associates.
  • Raises capital through crowdfunding.
    Crowdfunding enables a company to raise capital from investors via the Internet in exchange for securities. The company can’t be an investment fund. Other conditions apply.

Other prospectus exemptions are available. For more details, consult Regulation 45-106 respecting Prospectus Exemptions.


A company exempt from preparing a prospectus may be required to act through an authorized intermediary, such as an investment dealer.

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Before investing

Prospectus exemptions help companies to raise capital and offer investors more choice. But before investing, take the time to do your research and evaluate the risks.

  • Some scammers promote fraudulent investments which they present as “exempt” securities. See our section on fraud to learn more.
  • Are you in a position to risk losing your money? If the answer is no, then investing in prospectus-exempt securities may not be right for you.
  • Companies that issue exempt securities may be start-up companies. Their securities are considered to be high-risk investments. You run a very real risk of losing your investment.
  • Do you have the resources to remain patient? If you think you’ll have to resell your securities quickly, this type of investment may not be suitable for you. You may have to wait a very long time before reselling the securities or you may not be able to resell them at all.
  • Under securities rules, companies that issue exempt securities are not required to disclose information to investors, unlike companies listed on an exchange. You could receive little or no information about their activities. You’ll therefore need to spend more time looking for additional information about the company, its financial results, activities and officers.
  • Check that the person and firm you are dealing with are authorized to offer you the investment. Call the AMF Information Centre at 1-877-525-0337 or consult the Register of firms and individuals authorized to practise.

Before you invest

Before you invest, make sure you know all the facts.

Take the time to find out about the features, risks and potential return of the company you’re thinking of investing in.

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