A Canadian founder raising from an American angel, or an American fund buying into an Ontario company, usually assumes the accredited investor box means the same thing on both sides of the border. The numbers invite the assumption. The definitions underneath them do not support it.
The difference that catches people is what gets counted. An American with $3,000,000 in rental property and $200,000 in a brokerage account is a US accredited investor. In Canada, the same person fails the $1,000,000 financial-asset test, because real estate is not a financial asset, and would have to qualify on the $5,000,000 net-asset test or on income instead.
The tests side by side
| Test | Canada (NI 45-106, s. 1.1) | United States (Rule 501(a), Reg D) |
|---|---|---|
| Income | Net income before tax over $200,000 in each of the last 2 years, or $300,000 with a spouse, and expected again this year (CAD) | Income over $200,000 in each of the last 2 years, or $300,000 with a spouse or spousal equivalent, and expected again this year (USD) |
| Liquid wealth | Financial assets (cash, securities, certain deposits and insurance contracts) over $1,000,000, net of related debt | No separate liquid-asset test |
| Total wealth | Net assets of at least $5,000,000, home included | Net worth over $1,000,000, excluding primary residence |
| Very high liquid wealth | Financial assets over $5,000,000 (no risk form required) | — |
| Professional credentials | Not for individuals generally (registered advisers and dealers qualify in their own right) | Series 7, Series 65 or Series 82 licence holders in good standing |
| Insiders | Not a category on its own | Directors, executive officers and general partners of the issuer |
| Risk acknowledgement | Form 45-106F9 for most individuals, kept 8 years | None prescribed |
Where the Canadian test is harder
Real estate and private business value. The US net-worth test counts almost everything except the primary residence: rental properties, a cottage, the value of a private company. Canada's $1,000,000 test counts only financial assets. Private company shares are securities, so they count in principle, but their value has to be supportable. An investor whose wealth sits in a rental portfolio will usually qualify in Canada only on income or on the $5,000,000 net-asset test.
The paperwork. A Canadian individual relying on the income, $1,000,000 financial-asset or $5,000,000 net-asset test signs Form 45-106F9, and the company keeps it for eight years. The US has no equivalent form for a Rule 506(b) offering.
Where the Canadian test is easier
The currency. The Canadian thresholds are in Canadian dollars. With the Canadian dollar worth less than the US dollar, $200,000 of Canadian income is a lower bar, in real terms, than $200,000 of US income. The US figures have not been indexed to inflation since Regulation D adopted them in 1982, apart from the 2010 change that took the primary residence out of the net-worth calculation.
The home, at the top end. The Canadian $5,000,000 net-asset test includes your house. The US net-worth test never does.
Where only the US test works
The US accepts some investors on knowledge rather than wealth. Since the SEC's 2020 amendments, holders of the Series 7, 65 or 82 licences qualify regardless of income, and so do directors and executive officers of the company selling the securities. Canada's individual categories remain financial. A Canadian director of your company who does not meet the income or asset tests cannot use the accredited investor exemption, though the family, friends and business associates exemption often covers founders and directors.
A Canadian company selling to US investors
A sale to an American is governed by US securities law, wherever the company is. A Canadian private company raising from US accredited investors typically relies on Rule 506(b) of Regulation D, which prohibits general solicitation, or Rule 506(c), which permits it but requires the company to take reasonable steps to verify accredited status. The company files a Form D with the SEC within 15 days after the first sale and makes any state notice filings.
The Canadian side does not disappear. The company still has to comply with the securities law of the province it is in, and in some provinces a sale to a purchaser outside Canada still triggers a report. Get the US advice from US counsel; the Canadian counsel's job is to make sure the two sets of documents fit together.
A US company selling to Canadian investors
The rule runs the other way too. When a US company sells shares to someone who lives in Ontario, the distribution happens in Ontario, and Ontario's rules apply. A Canadian purchaser who meets the US definition but not the Canadian one cannot be sold to under the accredited investor exemption. If they qualify in Canada, the US issuer files a Form 45-106F1 report of exempt distribution within 10 days in the investor's province and collects a Form 45-106F9 if the investor is an individual relying on one of the first three tests.
US issuers miss this more often than Canadian ones, because nothing in a Reg D closing checklist mentions it. The filing fee is modest. Late filing fees, and the possibility that the sale was not exempt at all, are not.
Running a round with investors in both countries
Build the subscription package so that each investor certifies under the definition that applies to where they live, not a blended version. A Canadian questionnaire should ask the Canadian questions (financial assets, net assets, net income in Canadian dollars); a US questionnaire should ask the US ones. Then file in both places: Form D for the US sales, Form 45-106F1 for the Canadian ones, each within its own deadline — 15 days and 10 days. The accredited investor verification process describes how that evidence is collected and kept.
The two definitions share a few numbers and not much else. Treat them as two different questions, and ask each investor the one that applies to them.
Common questions
Is a US accredited investor automatically an accredited investor in Canada?
No. The Canadian definition in NI 45-106 uses different tests: financial assets over $1,000,000 or net assets of at least $5,000,000, both in Canadian dollars, or the income test. A US investor whose wealth is mainly real estate may meet the US net-worth test and fail the Canadian financial-asset test.
Does my house count toward accredited investor status in Canada or the US?
In the US, the primary residence is excluded from net worth. In Canada it is excluded from the $1,000,000 financial-asset test but included in the $5,000,000 net-asset test.
Are the Canadian accredited investor thresholds in Canadian dollars?
Yes. The Canadian thresholds are in Canadian dollars and the US thresholds are in US dollars, so the same nominal figure is a lower bar in Canada.
Can a Series 65 licence holder invest as an accredited investor in Canada?
Not on the strength of the licence. Since 2020 the US treats Series 7, 65 and 82 holders as accredited investors. Canada has no equivalent individual category; the individual must meet a Canadian income or asset test.
What does a US company file when it sells shares to a Canadian investor?
It must rely on a Canadian prospectus exemption in the investor's province and, for the accredited investor exemption, file a Form 45-106F1 report of exempt distribution within 10 days through SEDAR+. An individual investor relying on the income or $1,000,000 or $5,000,000 tests also signs Form 45-106F9.
What does a Canadian company file when it sells to US accredited investors?
Typically a Form D with the SEC within 15 days after the first sale under Rule 506, plus any state notice filings. Canadian provincial requirements can still apply, so the closing should be reviewed under both sets of rules.
Is there a Canadian version of the Form 45-106F9 requirement in the US?
No. The US prescribes no risk acknowledgement form for Rule 506(b) offerings. Rule 506(c) instead requires the issuer to take reasonable steps to verify accredited status.