The closing dinner is usually where you think the round ends. Securities regulators count from the same date in the other direction. Ten days after the money moves, a report is due, and the forms that prove each investor qualified had to be signed before it moved.
Neither form is difficult. Both are routinely done late, done wrong or not done, mostly because nobody on your deal was asked to own them.
Form 45-106F9: the risk acknowledgement, signed before the sale
Form 45-106F9 is a two-page form for individual accredited investors. Section 2.3(6) of NI 45-106 requires it when an individual relies on any of these tests:
- net income before tax over $200,000 in each of the last two years, or $300,000 with a spouse, expected again this year;
- financial assets over $1,000,000, alone or with a spouse, net of related debt;
- net assets of at least $5,000,000, alone or with a spouse.
An individual with financial assets over $5,000,000 does not sign it, and neither do corporations, trusts or other non-individual investors.
The form divides the work. The company fills in section 1 (the investment) and section 6 (where to get more information); the salesperson, if there is one, fills in section 5; the investor then completes sections 2 to 4, initials each risk statement, ticks the test they meet and signs. Sections 1, 5 and 6 have to be completed before the investor signs. One of the statements the investor initials reads, in substance, that they could lose their entire investment, with the dollar amount written in.
The form is not proof that the investor qualifies. It records that they say they do and that they understand the risk. You still have to take reasonable steps to confirm the answer — the verification process is a separate job. The company must keep the signed F9 for eight years after the distribution.
Form 45-106F1: the report, filed within 10 days
Form 45-106F1 tells the regulators that an exempt distribution happened. It is required after sales under the accredited investor exemption, the family, friends and business associates exemption, the offering memorandum exemption and the $150,000 minimum amount exemption, among others. Sales under the private issuer exemption generally need no report. The comparison of private placement exemptions sets out which is which.
The deadline is 10 days after the distribution date. If a round closes in tranches, each closing is a distribution with its own 10-day clock.
What the report asks for
| Part | What it covers | Public? |
|---|---|---|
| Issuer information | Name, head office, industry, whether it is a reporting issuer, size of the business | Yes |
| Directors, officers, promoters and control persons | Names and positions (for non-investment-fund issuers) | Partly |
| Details of the distribution | Date, type of security, price, total raised, number of purchasers by province | Yes |
| Commissions and finder's fees | Who was paid to find investors and how much | Yes |
| Schedule 1 | Each purchaser's name, address, amount and the exemption (and accredited investor paragraph) relied on | No — filed confidentially |
| Certification | Signed by a director or officer that the report is true | Yes |
Two parts cause most of the errors. The exemption has to be identified precisely: "accredited investor" is not enough when the form wants the paragraph of the definition, such as paragraph (j) for financial assets over $1,000,000. And finder's fees have to be disclosed, which is where companies sometimes discover that the person who introduced the investors needed to be registered as a dealer.
Where and how to file
Since SEDAR+ launched on 25 July 2023, reports of exempt distribution are filed there for every province and territory. The separate OSC portal in Ontario and the BCSC eServices system in British Columbia were retired for this purpose. One filing on SEDAR+ can cover purchasers in several provinces, and the system collects the fee for each jurisdiction where a purchaser lives. If your company is filing for the first time it will need a SEDAR+ profile, which takes a little time to set up — do it before closing, not on day nine.
What late filing costs
Filing fees are set province by province, and a report covering purchasers in four provinces pays four fees. Ontario adds a late fee for each business day the report is overdue, capped at an annual maximum. The fee is the smaller problem. A missed report is visible on the public record, regulators review exempt market filings for compliance, and an issuer that repeatedly files late can expect closer attention to the exemptions it relied on — including whether its investors actually qualified.
The larger risk sits behind the form. If an investor did not qualify, filing the report on time does not make the sale exempt. The investor may have a right to rescind, and the company has distributed securities without a prospectus or an exemption.
A closing checklist for an accredited investor round
- Before the subscription documents go out, decide which exemption each investor will rely on.
- For each individual relying on the income, $1,000,000 or $5,000,000 tests, send Form 45-106F9 with sections 1, 5 and 6 already completed.
- Collect a questionnaire that asks the actual test questions, and keep whatever evidence supports the answer.
- Set up or confirm the company's SEDAR+ profile.
- Close, and note the distribution date for each tranche.
- File Form 45-106F1, with Schedule 1, within 10 days.
- File the signed F9s and the verification records in the minute book or deal file, where they can be found for eight years.
If any investors are in the US, the Canadian report does not cover them; see Canadian versus US accredited investors for the Form D side.
None of this changes how the round is negotiated. It decides whether the round was legal, which tends to come up later, when someone wants their money back.
Common questions
What is Form 45-106F1?
Form 45-106F1 is the report of exempt distribution. A company that sells securities under certain prospectus exemptions, including the accredited investor exemption, must file it within 10 days after the distribution through SEDAR+.
When is Form 45-106F1 due?
Within 10 days after the distribution date. Each closing is a separate distribution with its own 10-day deadline.
Where do I file a report of exempt distribution?
On SEDAR+, for all Canadian jurisdictions. The system replaced the OSC electronic filing portal and BCSC eServices for this filing when it launched in July 2023.
Is the purchaser information in Form 45-106F1 public?
No. Schedule 1, which lists each purchaser's name, address, amount invested and exemption, is filed confidentially. The rest of the report is generally public.
Who has to sign Form 45-106F9?
An individual accredited investor relying on the income test, the $1,000,000 financial-asset test or the $5,000,000 net-asset test. Individuals with financial assets over $5,000,000 and non-individual investors do not sign it.
How long must a company keep Form 45-106F9?
Eight years after the distribution.
Does a signed Form 45-106F9 prove the investor is accredited?
No. It records the investor's statement and risk acknowledgement. The company must still take reasonable steps to verify that the investor meets the test they claim.
What happens if I file Form 45-106F1 late?
Late fees may apply — Ontario charges a late fee for each business day, up to an annual cap — and late filing is a common compliance deficiency identified by regulators. Filing late does not by itself void the exemption, but it draws attention to the distribution.