Entrepreneurs and small and medium-sized businesses (SMBs) are important drivers of economic growth and job creation in Québec.

Do you want to move new projects forward? Grow your business and develop new markets? In addition to your own money, you may also need to raise other capital, which can come from different sources. For example, you can borrow from a financial institution, a friend or a family member. Along the way, you might want to solicit investors. Bear in mind, though, that soliciting investors is a regulated activity in Québec. There are things you can do, and things you can't.

If you do find investors, you may have to transfer some of your business assets to them. You'll also have to keep them updated: Investors expect to be informed about your successes and failures. You'll need to spend time and money to stay in touch with your investors.

This section is primarily for owners of start-up or established SMBs who are thinking about seeking investors to finance their capital needs. It will give you some basic information to get you started. But don't hesitate to contact the AMF Information Centre if you have questions or ask a lawyer for assistance.

Are you looking for lenders, investors or partners?

While lenders, investors and partners can all provide you with capital, they play very different roles.

A lender grants you a loan. You sign a contract with a financial institution or an individual for a specific amount of money. The contract stipulates conditions such as the loan repayment term, instalment amount and frequency, interest rate and fees. There are various types of loans; for example, personal loans and mortgages.

An investor decides to put his money into a business in exchange for 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.
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. 
. He is looking for a return on his investment in the form of, say, dividendsDividends are the portion of the earnings, after taxes, that a corporation distributes to shareholders in proportion to their holdings., interestInterest is a percentage of an amount, paid at a given frequency (for example, 2% per year). It is paid by the borrower to compensate the investor for lending them the money.
When an investor deposits money in their account at the bank, the bank uses it for other purposes. The investor therefore lends their money to the bank, which compensates the investor by paying them interest.  
or capital gainsA capital gain is the difference between the selling price and the purchase price of an investment, when the difference is positive.
For example, if you buy a share for $12 and later sell it for $20, then your capital gain is $8.
This is the opposite of a capital loss. 

As a rule of thumb, lenders and investors do not have any input in the day-to-day management of the business. If the investor is a shareholderA shareholder is a person who holds shares in a company. The shareholder can be a company itself., at most, he may have a voting right or the right to ask questions during a shareholders' meeting.

A partner may invest cash with the intent of earning a return, but he will also be involved in running the business and making daily decisions. In addition to his financial backing, you need his expertise so that, together, you can expand the business. A partner may also have to share liability if the business runs into snags and is sued. A person who acts exclusively as a lender or investor does not share this liability.

This section covers only entrepreneurs who are looking for investors, not lenders or partners.

Are you thinking about finding investors? What you need to know...

Are you thinking about finding new investors too? If so, you may have to register as a dealer and prepare 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.  
. These are two different requirements you need to consider when seeking financing.


EyeTease FX Studio is a fast-growing SMB that creates visual effects for major film productions. This fledgling company has huge potential, but is bursting at the seams in its current premises. A capital infusion would allow it to grow. The owners are considering looking for new investors.

In exchange for a financial injection, investors would receive securities—possibly shares or bonds.

Also read

Registration trigger

Generally, businesses that raise capital by soliciting investors and offering them securities in return, and that are otherwise not involved in investment activities (such as providing investment advice), are not required to register as a securities dealer. Certain factors could however trigger the requirement for your business to register as a dealer, in particular, the frequency with which you solicit investors and if someone in your business devotes most of his efforts to doing so.

The business's directors, officers and employees are not likely acting as dealers if the solicitation of investors is not a significant part of their duties. However, the opposite is also true. For example, an officer who spends most of his time soliciting investors rather than running the business and earns most of his compensation from the capital he raises. This could trigger the dealer registration requirement. If you are not sure, consult a lawyer.

What if the business isn't operational yet?

A start-up can refinance often in its early development stage. However, the capital it raises must be used to launch activities that are not related to securities. This is where a business plan is critical. For example, ABC Mining Inc. hasn't begun exploration work yet, but it does have a business plan with clear milestones. It can seek financing based on its detailed business plan, but it must be able to show that it is respecting the phases and milestones set out in its plan. Even if your business is not required to register as a dealer, it must still prepare a prospectus, unless it qualifies for a prospectus exemption.

Prospectus requirement

In most cases, a business that solicits investors must provide them with detailed disclosure materials so that they are regularly updated. In particular, it must provide a prospectus and audited financial statements. However, it must first obtain approval from the Autorité des marchés financiers (the "AMF") to use the prospectus. This is the case for businesses that solicit investors by selling shares to the public (public offering); in other words, businesses whose securities are listed on an exchange.

Investors must be informed about certain changes that could materially affect the value of their investment in the business. The cost of preparing a prospectus and audited financial statements and keeping investors updated can be high for an SMB.

In some instances, you can solicit investors without having to give them a prospectus or audited financial statements. This section explains when you can solicit investors without a prospectus, provided you meet certain conditions (prospectus exemption).

Example: EyeTease FX Studio

After doing research, the officers of EyeTease FX Studio realize that it would be too costly to raise capital through a public offering. They look into how they can solicit investors on a smaller scale.

Prospectus exemptions

You must comply with certain conditions to be able to benefit from a prospectus exemption.

Private issuer exemption

If you are soliciting investors for the first time, you can likely use the private issuer exemption. Your business is a private issuer if it does not solicit more than 50 investors (excluding employees) and if its investment securities are subject to resale restrictions (the investor cannot sell them to just anyone).

As a private issuer, generally, you can only solicit the following types of investors:

  • Your employees.
  • Your business’s officers, directors, executive officers, founders or control persons.
    • Their immediate family members and spouses.
      • Who is an immediate family member? A spouse, parent, grandparent, brother, sister, child or grandchild is considered to be an immediate family member. Cousins, uncles and aunts do not fall into this category and cannot be solicited.
    • Their close personal friends. A close personal friend is someone who has known the person for a sufficient period of time to assess their abilities and reliability. A Facebook “friend” probably doesn’t qualify.
      • Their close business associates. A close business associate is someone who knows the person well enough to be able to assess their abilities and reliability. Current or former clients do not qualify.
  • Accredited investors: An accredited investor has above-average income or substantial assets. He must satisfy the following financial tests:
    • Has, alone or with his spouse, financial assets (cash and investments) in excess of $1,000,000, net of debts and taxes, and excluding a house and other real estate.
    • Has assets, net of debts, of at least $5 million (can include a house and other real estate).
    • Has net income before taxes exceeding $200,000 ($300,000 if combined with spouse’s net income) in each of the two prior years and reasonably expects to exceed that income level in the current year.

Since you are restricted to this list, you cannot solicit investors through ads, for example, Kijiji.

If your investors are listed above and your SMB uses the private issuer exemption, you do not have to report the solicitation to the AMF. Investors who hold securities of your SMB can only sell them to other investors included in the above list, with the approval of the SMB’s officers.

Investment securities issued under a prospectus exemption are usually less liquid than securities listed on an exchange. Investors who hold shares of your SMB may therefore have difficulty selling them.

Do you think you’ll need more than 50 shareholders and will have to look outside the group of investors mentioned above? If so, other alternatives are available.

Crowdfunding prospectus exemption

Crowdfunding is a process through which an individual or a business can raise small amounts of money from a large number of people through an on-line funding portal. The objective is to raise sufficient funds in order to carry out a specific project.

You must solicit investors through a funding portal website. In Québec, depending on your project, your needs and the development stage of your business, you can choose between two crowdfunding prospectus exemptions: the start-up crowdfunding exemption or the crowdfunding exemption (Regulation 45-108). The table below summarizes the features of these two prospectus exemptions.


Start-Up crowdfunding exemption

Crowdfunding exemption (Regulation 45-108)

Do you have to publish your financial statements?


Yes, and in some cases, the financial statements must be audited

Maximum offering amount per investor


$2,500 or $25,000 for accredited investors

Maximum total offering amount

$250,000 twice a year

$1,500,000 per year

On-line funding portals through which you can solicit investors

Funding portals run by a dealer registered with the AMF

Funding portals that are exempt from registration

Portals authorized to operate in Québec. These portals are shown on a list available on the AMF website.

Funding portals run by a dealer registered with the AMF

Portals authorized to operate in Québec. These portals are shown on a list available on the AMF website.

Filing of offering document and report of exempt distribution with the AMF

Within 30 days of the distribution

Within 10 days of the distribution

You must prepare an offering document and post it on the funding portal.

The offering document contains basic information about:

  • your business;
  • its activities;
  • its officers;
  • its financial position;
  • the minimum amount you need to raise and what the money will be used for;
  • the securities you are offering to investors;
  • the potential risks facing your business and projects.

The funding portal will require the investor to confirm that he has read and understood the offering document and the risk warnings (the investor must understand that the value of his investment can fluctuate and that he may be unable to sell his securities).

If you rely on the crowdfunding exemption under Regulation 45-108, you must also post your financial statements on the crowdfunding portal. For the start-up exemption, financial statements are optional, but can be a useful source of additional information for investors.

As soon as your offering document is available on the funding portal, you have 90 days to raise the minimum funds. The portal will hold the funds until you have raised the minimum amount. If you are unable to raise the minimum funds, you will not receive the money and the portal will reimburse investors.
If your crowdfunding campaign is successful, you must file your offering document with the AMF, along with a Report of Exempt Distribution (filing fees apply).

If you are considering using either of the two crowdfunding exemptions, read the Start-up Crowdfunding Guide.

Example: EyeTease FX Studio
The officers of EyeTease FX Studio think that it would be advisable not to limit themselves to 50 investors. They are looking into the possibility of using the crowdfunding prospectus exemption.

Offering memorandum exemption

The offering memorandum contains information on your business, including:

  • its activities;
  • its officers;
  • potential risks;
  • use of funds raised.

Contrary to some of the above exemptions, with the offering memorandum, you must provide audited financial statements. You must also have investors sign a risk acknowledgement form in which the investor acknowledges that he understands and accepts the risk of the investment and that he is aware that the securities may be difficult to sell.

In Québec, the maximum purchase under an offering memorandum exemption is $10,000, unless the investor is an accredited investor or an eligible investor.

To be an eligible investor, at least one prescribed condition must be met.

Conditions include the following:

  • Alone or with a spouse, own net assets exceeding $400,000.
  • Have net income before taxes exceeding $75,000 in each of the two prior years, and reasonably expect to exceed that income level in the current year.
  • Alone or with a spouse, have net income exceeding $125,000 in each of the two prior years, and reasonably expect to exceed that income level in the current year.
  • Obtain advice regarding the suitability of the investment from a registered adviser.

You do not need approval from the AMF to use the offering memorandum exemption. However, your offering memorandum and the Report of Exempt Distribution (pdf - 3 MB)This link will open in a new windowJune 2016 must be sent to the AMF within 10 days following the distribution.

Table: Prospectus exemptions


Private issuer

Start-up crowdfunding

Crowdfunding (Regulation 45-108)

Offering memorandum

Solicitation of investors

Maximum of 50 (excluding employees).

You can solicit only certain persons.

General public, via a funding portal registered with the AMF


General public, via a funding portal exempt from registration


General public, via a funding portal registered with the AMF

General public

Maximum amount a person can invest




$10,000, unless the investor is an accredited investor or an eligible investor.

Maximum funds you can raise


$250,000, twice a year

$1,500,000 per year


Documents you must give to investors


Offering document

Offering document Financial statements (audited or unaudited, as applicable)

Offering memorandum Audited financial

Risk acknowledgement


The funding portal will require the investor to confirm that he has read and understood the offering document and the risk warnings.

The funding portal will require the investor to confirm that he has read and understood the offering document and the risk warnings.

You must have the investor sign a risk acknowledgement form.

Documents you must submit to the AMF


Offering document
Report of Exempt Distribution (pdf - 3 MB)This link will open in a new windowJune 2016 no later than 30 days following the distribution

Offering document
Report of Exempt Distribution (pdf - 3 MB)This link will open in a new windowJune 2016 no later than 10 days following the distribution

Offering memorandum
Report of Exempt Distribution (pdf - 3 MB)This link will open in a new windowJune 2016 no later than 10 days following the distribution


For more information

As you can see, soliciting investors is more complicated than simply posting an ad. You must comply with certain requirements to ensure that everything is legal. You may have to seek professional advice from lawyers or accountants. You can also contact the AMF Information Centre for assistance.

End of the Information