What is the Private Market? 2022-02-27T20:31:05-07:00
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The “Private Market” or “Exempt Market” refers to companies raising capital without issuing a prospectus. Securities legislation allows for capital to be raised without a prospectus, provided an exemption from the prospectus use is available. Common prospectus exemptions used are issuing an offering memorandum or selling to accredited investors. Private companies that require capital from investors are not publicly traded but still need investors to achieve the goals for their companies and projects and want to do so without going public.

In Canada, issuing securities by way of filing a prospectus significantly increases the cost of raising capital so many private companies choose to raise capital using prospectus exemptions.

Investing in the “Private Market” or “Exempt Market” offers investors an opportunity to invest in an asset class that is not generally offered by most traditional financial institutions.

The “Private Market” or “Exempt Market” refers to companies raising capital without issuing a prospectus. Securities legislation allows for capital to be raised without a prospectus, provided an exemption from the prospectus use is available. Common prospectus exemptions used are issuing an offering memorandum or selling to accredited investors. Private companies that require capital from investors are not publicly traded but still need investors to achieve the goals for their companies and projects and want to do so without going public.

In Canada, issuing securities by way of filing a prospectus significantly increases the cost of raising capital so many private companies choose to raise capital using prospectus exemptions.

Investing in the “Private Market” or “Exempt Market” offers investors an opportunity to invest in an asset class that is not generally offered by most traditional financial institutions.

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How is the Private Market Regulated?

The securities commissions/regulatory authorities in each province and territory regulate the public and private capital markets in Canada through securities legislation, regulations, rules and national or multilateral instruments.

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What is an Exempt Market Dealer, or EMD?

The term Exempt Market Dealer (usually shortened to “EMD”) defines a company licensed by securities regulators to trade in or underwrite investment securities that have not been qualified by a prospectus; instead, the investments are exempt from the prospectus requirement.

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