Much of the capital that builds Alberta businesses never touches a public stock exchange. Energy services companies, real estate developers, agricultural processors and technology start-ups raise money from private investors under exemptions from the prospectus requirement, and the offering memorandum exemption is one of the most widely used routes for individual investors to participate.
The exemption, found in National Instrument 45-106 and administered in Alberta by the Alberta Securities Commission, lets an issuer sell securities to the public on the strength of an offering memorandum rather than a full prospectus. In exchange, it imposes investment limits on individuals that depend on their financial circumstances, and it places responsibility on investors to understand what they are buying.
On April 17, 2025, securities regulators in Alberta and five other provinces issued Coordinated Blanket Order 45-933, which loosens one of those limits for eligible investors reinvesting proceeds from earlier offering memorandum investments. This post explains the exemption, the limits, the new order and the due diligence an Alberta investor should apply before committing capital.
This is general information, not investment advice. Investors should consult a registered dealer or adviser and their own legal and financial advisors before investing in any exempt-market security.
Key Takeaways
- The offering memorandum exemption allows individuals to invest in private issuers without a prospectus, subject to annual limits tied to their financial circumstances
- Non-eligible investors are capped at $10,000 in a twelve-month period, eligible investors at $30,000, rising to $100,000 with suitability advice from a registered dealer or adviser
- Coordinated Blanket Order 45-933, effective April 17, 2025, lets eligible investors reinvest proceeds from prior offering memorandum investments up to $100,000 outside the standard cap
- Private securities are typically illiquid, and due diligence on the people, the structure, the fees and the document itself is the investor’s own responsibility
- With the Bank of Canada holding its policy rate at 2.75% on April 16, exempt-market yields should be judged against risk, not just against falling deposit rates
Why the Exempt Market Matters in Alberta
Alberta’s economy is built on privately held companies. The province’s population passed 4.9 million at the start of 2025 after growing by more than 168,000 people during 2024, and that growth is financed in large part by private capital: apartment buildings, self-storage, industrial land, oilfield services, equipment and the working capital of growing firms. Much of that capital is raised from Alberta residents through exempt-market offerings.
For investors, the exempt market offers exposure to assets and businesses that are not available on public exchanges, often with cash distributions and a direct connection to the local economy. For issuers, it provides growth capital without the cost and disclosure burden of a public listing.
The trade-off is that exempt-market securities are usually illiquid, disclosure is lighter than in the public market, and the quality of issuers varies widely. The rules set boundaries; they do not substitute for judgment. An Alberta investor who understands both the boundaries and the limits of the rules is in a far stronger position than one who assumes that the availability of an exemption amounts to a regulatory endorsement of the investment.
The Offering Memorandum Exemption Explained
Under the exemption, an individual who is not an eligible investor may invest up to $10,000 in offering memorandum securities in any twelve-month period. An eligible investor may invest up to $30,000 in the same period, and that limit rises to $100,000 if a registered dealer or adviser confirms that the investment is suitable for the investor. These are aggregate limits across all offering memorandum investments, not limits per issuer.
An individual qualifies as an eligible investor by meeting one of several financial tests: net assets of more than $400,000; net income of more than $75,000 in each of the two most recent years; or net income of more than $125,000 combined with a spouse over the same period. The tests are designed to identify investors with the capacity to absorb a loss, not to certify that any particular investment is sound.
The issuer must deliver the offering memorandum before the investor commits, and the investor signs a risk acknowledgement. The offering memorandum describes the business, the use of proceeds, the securities being offered, the compensation paid to those selling them, the risk factors and the financial statements. It is a legal document that carries rights of action if it contains a misrepresentation.
The April 17 Blanket Order: Reinvesting Without the Cap
Coordinated Blanket Order 45-933 was adopted on April 17, 2025 by regulators in Alberta, Ontario, Québec, Saskatchewan, New Brunswick and Nova Scotia. Its purpose is narrow but practical. An eligible investor who has received proceeds or returns from a prior offering memorandum investment, for example on the maturity of a mortgage investment or the redemption of units, may reinvest those proceeds in offering memorandum securities up to $100,000 without being constrained by the standard $30,000 annual limit.
The order responds to a real problem. Under the previous rules, an investor with capital returning from a successful private investment could be prevented from redeploying it into a similar opportunity purely because of the annual cap, even though the money had already been in the exempt market. It does not change the eligibility tests, and it does not relax any of the disclosure or suitability obligations that apply to the new investment. Investors should confirm the precise conditions with their dealer, because the order applies only where its requirements are met.
Due Diligence on a Private Issuer
The people and the track record
In a private issuer, the management team is the investment. Investors should look at who controls the issuer, what they have done before, whether they have completed comparable projects, and whether they have their own capital at risk alongside investors. Registration and disciplinary history can be checked through the Alberta Securities Commission. An issuer that is reluctant to explain its history is offering an important piece of information.
Structure, fees and liquidity
Understand exactly what security is being purchased: a limited partnership unit, a preferred share, a promissory note or a mortgage interest each carries different rights and priorities. Identify every fee, including upfront commissions, management fees, promoter compensation and performance allocations, and calculate what they mean for the net return. Ask how and when capital can be withdrawn, because most exempt-market securities have no secondary market and redemption rights are often limited or discretionary.
The document itself
Read the offering memorandum from the risk factors backwards. The risk factors and the financial statements tell an investor more than the executive summary does. Look for related-party transactions, the use of proceeds, whether the financial statements are audited, and whether projections are labelled as such. If something in the document does not match what the salesperson said, the document governs.
Suitability, Concentration and the Rate Backdrop
The Bank of Canada held its policy rate at 2.75% on April 16, pausing after seven consecutive cuts that began in June 2024. Its next scheduled announcement is June 4. Lower rates have reduced the yield on guaranteed deposits and government bonds, and that has pushed some investors to look at private offerings promising higher distributions. The comparison is not like for like. A private mortgage fund or a real estate limited partnership carries credit risk, liquidity risk and manager risk that a guaranteed deposit does not.
Suitability is the discipline that keeps this in proportion. Even where the rules permit a $100,000 investment, an investor should ask what share of their liquid net worth they are prepared to lock up for several years with limited ability to exit. Concentration in a single issuer, a single asset class or a single region compounds the risk. The exemption’s limits are ceilings, not targets, and a registered dealer’s suitability assessment is a floor, not a guarantee.
The broader backdrop deserves attention too. U.S. tariffs on Canadian goods have been in effect since March, and Alberta issuers in trade-exposed sectors face a more uncertain revenue picture than they did a year ago. An investor evaluating a private offering should ask how the issuer’s business or property is affected by trade conditions, interest rates and the local economy, and should expect the offering memorandum to address those risks specifically rather than generically.
A Disciplined Approach for Alberta Investors
The offering memorandum exemption is one of several routes into the exempt market. Accredited investors, who meet higher financial thresholds, can invest without the annual caps. The private issuer exemption and the family, friends and business associates exemption allow closely held companies to raise money from people connected to them. The minimum amount exemption applies to non-individual investors purchasing $150,000 or more.
Regardless of the route, the same principles apply. Know who is behind the issuer. Understand the security, the fees and the exit. Read the document. Size the position so that a total loss would be painful but not disabling. Use a registered dealer or adviser where the rules require it and where independent judgment adds value. And treat the April 17 blanket order as what it is: a useful increase in flexibility for experienced eligible investors, not a signal that the caution built into the rules has been relaxed.
Pragma Capital’s specialty investments practice approaches private opportunities with the same patience and precision we bring to lending and M&A. The exempt market has financed a great deal of what makes Alberta’s economy distinctive, and it will continue to do so. Investors who bring discipline to it are the ones who will benefit from it.