Paying someone a success fee to introduce investors can require that person to be a registered dealer — and it is the issuer’s exposure as much as the finder’s. Registration turns on being in the business of trading, which Canadian regulators assess against published factors. Compensation is one of them. The answer is fact-specific.
Key takeaways
SECTION 01 OF 09
A prospectus exemption is not a registration exemption. Ontario keeps them in separate Parts of one statute, and section 25(1) is the prohibition: unless exempt, “the person or company shall not engage in or hold himself, herself or itself out as engaging in the business of trading in securities” without registering as a dealer.
Relief from that requirement lives in Part 8 of NI 31-103 and in a list of security types at section 35. There is even a dealer category for exempt distributions: an exempt market dealer may “act as a dealer by trading a security that is distributed under an exemption from the prospectus requirement”, which would be pointless if a prospectus exemption excused registration. Treadstone Law on the private-issuer and accredited-investor exemptions covers disclosure, not registration; see friends and family capital.
SECTION 02 OF 09
Under section 1(1) of the Ontario Act, “trade” includes “any act, advertisement, solicitation, conduct or negotiation directly or indirectly in furtherance of any of the foregoing”. That clause is why a finder who never signs a subscription agreement, never touches the money and never appears on the cap table can still be trading.
Forwarding a deck to a contact list and negotiating terms are acts in furtherance of a sale of securities. Clean paperwork is not the test; conduct is. Québec arrives differently: section 8.1 redefines “trade” there by reference to its own Act, where the instrument is adopted as Regulation 31-103, CQLR c. V-1.1, r. 10.
SECTION 03 OF 09
The words that matter are in the business of, and they are recent: section 25 was re-enacted by 2009, c. 18, Sched. 26, s. 4 and, per the e-Laws amendment table, came into force on 28 September 2009 — the same proclamation that section 17.1(2) of NI 31-103 makes the instrument’s Ontario start date. The Act expects published criteria: section 25(7) lets the Commission adopt guidelines setting out “criteria to be considered in determining whether a person or company is engaged in a business when trading securities”.
Companion Policy 31-103CP, which the Ontario Securities Commission publishes alongside the instrument, weighs five things: activities similar to a registrant; intermediating trades or market making; repetition, regularity or continuity; being or expecting to be compensated; and soliciting. Two fit an ordinary finder almost exactly — “In general, we consider intermediating a trade between a seller and a buyer of securities to be trading for a business purpose”, and “Contacting anyone to solicit securities transactions or to offer advice may reflect a business purpose”.
This is guidance, not the rule, and it says so. “This is not a complete list. We do not automatically assume that any one of these factors on its own will determine whether an individual or firm is in the business of trading” — evidence of how regulators will apply section 25(1), not the provision. Anyone who tells you a given arrangement is definitely fine, or definitely caught, is claiming more than the published material supports.
SECTION 04 OF 09
An unpaid introduction and a paid one are not the same arrangement. The policy is explicit: “Receiving, or expecting to receive, any form of compensation for carrying on the activity, including whether the compensation is transaction or value based, indicates a business purpose.” It adds that it does not matter whether compensation is actually received, or in what form.
The point sharpens inside the issuer. Among the factors suggesting an issuer and its people are in the business of trading, the policy names that “the principal purpose of the individual’s employment is raising capital through distributions of the issuer’s securities”, or that their pay “is based solely or primarily on the amount of capital they raise for the issuer”. A success fee is that description in one line.
SECTION 05 OF 09
One-time activity is generally outside registration, and the example is this hub’s subject matter: “In general, we do not require registration for one-time trading or advising activities”, including advising that “relates to the sale of a business”. The other carve-out is incidental activity: “merger and acquisition specialists that advise the parties to a transaction between companies are not normally required to register as dealers or advisers”.
Then the sentence that decides most real mandates: “if the merger and acquisition specialists also engage in capital raising from prospective investors (including private placements), they will need to consider whether such activity would be in the business of trading and require registration”. The fault line is not the fee or the job title — it is whether the work is selling a company or finding investors. Treadstone Law separates a business broker from an M&A advisor.
SECTION 06 OF 09
Section 8.5 of NI 31-103 exempts a trade made through a registered dealer, then defeats itself for finders. It applies where “the trade is made through a registered dealer, if the dealer is registered in a category that permits the trade unless, in furtherance of the trade, the person or company seeking the exemption solicits or contacts directly any purchaser”.
The policy applies that to finders by name: “if an individual acts in furtherance of a trade by soliciting or contacting potential purchasers of securities (sometimes referred to as a finder) and then the sale to the purchaser is executed through a registered dealer, the individual would not qualify for this exemption”. Routing paperwork through a dealer does not cure direct contact with the investor. British Columbia and New Brunswick have a codified route Ontario lacks: section 8.4(1) exempts a person there “not engaged in the business of trading in securities or exchange contracts as a principal or agent”, and subsection (2) gives Manitoba the same rule for securities.
SECTION 07 OF 09
A company that contracts out its capital raising can be pushed into the dealer category. Listing conduct that may require an issuer to register, the policy names issuers that “employ or contract individuals to perform activities on their behalf that are similar to those performed by a registrant”. The finder’s status is an input to the issuer’s.
The consequences reach the people who signed off. Contravening Ontario securities law is an offence under section 122(1)(c), carrying “a fine of not more than $10 million or to imprisonment for a term of not more than five years less a day”; and under section 129.2 “a director or officer of the company or person who authorized, permitted or acquiesced in the non-compliance shall be deemed to also have not complied”.
The exposure usually arrives before a regulator does: the next round, the next lender and the eventual buyer all ask who was paid what for the last raise. Treadstone Law’s investor checklist and Fort Frances case study show what a clean raise documents.
SECTION 08 OF 09
The strongest evidence that a paid finder can need registration is that a commission wrote an exemption to relieve them of it. ASC Blanket Order 31-536, the Alberta Small Business Finder’s Exemption, adopted 10 November 2021, opens with the baseline: “The dealer registration requirement prohibits a person or company from acting as a dealer unless registered.”
Its conditions map the concerns: the finder had to be unregistered, could not call the security suitable, could not solicit beyond a substantial pre-existing relationship, had to file a Finder’s Information Report within ten days, and had to get a signed acknowledgement that “The Finder does not act for me and does not owe me a duty of care.” It reached only an Alberta business that had raised no more than $5,000,000.
It is gone. The ASC extended it on 10 November 2025 — “The ASC is now extending the expiration date of the Exemption by three months until February 11, 2026” — and the ASC’s instrument record now shows it expired on that date, every page of the order stamped “EXPIRED”. A 2024 note on Alberta finders describes a rule that no longer exists.
SECTION 09 OF 09
Two Ontario interim class orders currently relieve named actors of section 25(1), and both answer this the same way. Under Ontario Instrument 32-509, an early-stage business may sell its own shares to accredited or self-certified investors without a dealer, capped at $3,000,000 for the issuer group — only where “the issuer does not provide to any person or company” … “compensation for finding investors, or” … “any transaction-based compensation in connection with the distribution”.
The angel-group order reads the same: Ontario Instrument 32-508 relieves a not-for-profit angel investor group of section 25(1) only if it does not “pay compensation to any person or company in connection with any investment opportunity or investment in an issuer”, beyond its own people. Two orders conditioning relief on paying no one to find investors is a pattern.
So settle three things before signing: where every prospective purchaser resides, because this is provincial law; who will contact them; and whether a registered exempt market dealer could do the work instead. Treadstone Law on non-circumvention clauses and its referral-fee dispute address enforcing an introduction fee — a different question from whether it was permitted. Other provinces adopt NI 31-103 with local variations, and the business trigger is a fact-specific judgment on conduct.
Yes. Receiving or expecting to receive any form of compensation for the activity, whether transaction- or value-based, is one of the factors regulators weigh toward finding a business purpose to trade — and it doesn’t matter whether the compensation is actually received or in what form.
No. ASC Blanket Order 31-536, the Alberta Small Business Finder’s Exemption, was extended once and then expired on 11 February 2026. Every page of the order is now stamped EXPIRED, so an arrangement relying on it is relying on a rule that no longer exists.
Not if the finder solicited or contacted the purchaser directly. The exemption for trades made through a registered dealer specifically fails where the person seeking it solicits or contacts any purchaser in furtherance of the trade — routing paperwork through a dealer doesn’t cure that direct contact.
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