The offering memorandum exemption lets a company raise money from a broad range of investors — not just accredited investors — without filing a prospectus, in exchange for giving every buyer a prescribed disclosure document and capping how much each non-accredited investor can put in.
Ontario Securities Commission investor-education material describes the mechanism directly: the offering memorandum exemption “allows companies to sell securities to a wide range of investors based on an offering memorandum being made available”, where the offering memorandum itself is “a document that follows a prescribed form and outlines a company’s business and affairs.” The underlying rule sits in National Instrument 45-106, section 2.9; because the consolidated instrument is published only as a PDF, this page attributes the rule to the section rather than linking the document directly, and links the OSC’s instrument landing page instead.
The exemption splits investors into two tiers with different dollar caps, and the same source states them precisely. An eligible investor — someone with “net assets, alone or with a spouse, exceeding $400,000”, or net income exceeding $75,000 in each of the previous two years (or $125,000 combined with a spouse) with an expectation of exceeding it again — can invest “no more than $30,000” under the exemption in the 12 months before the purchase. That cap rises to $100,000 where a portfolio manager, investment dealer or exempt market dealer has advised the investor that going above $30,000 is suitable. An investor who is neither accredited nor eligible — a non-eligible investor — is capped at $10,000 in the same 12-month window.
What makes the offering memorandum exemption distinct within the exemption family is that it is the route that opens the door to investors who are neither accredited nor otherwise eligible under a narrower category at all — the trade-off is the disclosure document and the dollar caps above, neither of which the accredited investor exemption imposes on its own terms.
A private company raising a $2,000,000 round wants to include a family member who does not qualify as an accredited investor and has modest income. Using the offering memorandum exemption, the company can accept that investment provided it delivers a compliant offering memorandum, and provided the family member does not exceed $10,000 invested under this exemption in the trailing 12 months — unless the family member separately clears one of the eligible-investor tests, which would raise the cap to $30,000, or to $100,000 if a registered dealer has advised that a larger investment is suitable for them.
See also: Accredited investor · Exempt market dealer · Private issuer exemption.
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