List of Eligible Investors

“eligible investor” means:

• (a) a person whose
  • (i) net assets, alone or with a spouse, in the case of an individual, exceed $400 000,
  • (ii) net income before taxes exceeded $75 000 in each of the 2 most recent calendar years and who reasonably expects to exceed that income level in the current calendar year, or
  • (iii) net income before taxes, alone or with a spouse, in the case of an individual, exceeded $125 000 in each of the 2 most recent calendar years and who reasonably expects to exceed that income level in the current calendar year,
• (b) a person of which a majority of the voting securities are beneficially owned by eligible investors or a majority of the directors are eligible investors,
• (c) a general partnership of which all of the partners are eligible investors,
• (d) a limited partnership of which the majority of the general partners are eligible investors,
• (e) a trust or estate in which all of the beneficiaries or a majority of the trustees or executors are eligible investors,
• (f) an accredited investor,
• (g) a person described in section 2.5 of National Instrument 45-106 [Family, friends and business associates], or
• (h) in Manitoba, Northwest Territories, Nunavut, Prince Edward Island and Yukon, a person that has obtained advice regarding the suitability of the investment and, if the person is resident in a jurisdiction of Canada, that advice has been obtained from an eligibility adviser.

(2.1) In Alberta, New Brunswick, Nova Scotia, Ontario, Québec and Saskatchewan the prospectus requirement does not apply to a distribution by an issuer of a security of its own issue to a purchaser if

• (a) the purchaser purchases the security as principal,
• (b) the acquisition cost of all securities acquired by a purchaser who is an individual under this section in the preceding 12 months does not exceed the following amounts:
  • (i) in the case of a purchaser that is not an eligible investor, $10 000;
  • (ii) in the case of a purchaser that is an eligible investor, $30 000;
  • (iii) in the case of a purchaser that is an eligible investor and that received advice from a portfolio manager, investment dealer or exempt market dealer that the investment is suitable, $100 000,
• (c) at the same time or before the purchaser signs the agreement to purchase the security, the issuer
  • (i) delivers an offering memorandum to the purchaser in compliance with subsections (5) to (13), and
  • (ii) obtains a signed risk acknowledgement from the purchaser in compliance with subsection (15), and
• (d) the security distributed by the issuer is not either of the following:
  • (i) a specified derivative;
  • (ii) a structured finance product.

A few notes on the cap:

The $30,000 cap only applies to purchasers resident in Alberta, New Brunswick, Nova Scotia, Ontario, Québec and Saskatchewan; the cap only applies to an “individual” person.

The cap does not apply in the following instances:

• 1. The investor is a person other than an individual (whether “eligible” or not) where the entity was not set up for the purpose of making the investment;
• 2. The individual investor is resident in British Columbia, Manitoba, Prince Edward Island, Newfoundland & Labrador (there are restrictions on ineligible);
• 3. An accredited investor;
• 4. A person purchasing under the FFBA exemption; and
• 5. A “minimum amount” subscription.