A TSXV junior announces a raise at a discount to the last close. You do the usual math and assume the new paper is locked up for four months. Then the stock bleeds from the open on closing day, and you realize the new shares were never locked up at all. That is the listed issuer financing exemption, better known as LIFE, and if you trade Canadian small caps you need to know how it works.
The listed issuer financing exemption (LIFE) is a Canadian prospectus exemption in Part 5A of NI 45-106. It lets a company listed on a Canadian exchange for at least 12 months raise money from any investor, retail included, using a short Form 45-106F19 offering document instead of a full prospectus. Shares sold under it are free trading as soon as the deal closes.
This post covers what LIFE is, how it differs from a regular private placement and a bought deal, and how to find the offering document on SEDAR+ and the company website before the new supply lands.
In this article
- What is the listed issuer financing exemption?
- How is a LIFE offering different from a private placement?
- LIFE vs private placement vs bought deal: comparison table
- How do you spot a LIFE offering on SEDAR+ and the issuer website?
- What should traders check in a LIFE deal?
- FAQ
- Reading a LIFE deal more closely
- More questions traders ask
What is the listed issuer financing exemption?
Short answer: the listed issuer financing exemption is a prospectus exemption in Part 5A of National Instrument 45-106 that lets a company listed on a Canadian exchange sell shares to the public without a full prospectus, and the shares it sells are free trading with no four-month hold.
The Canadian Securities Administrators (CSA) brought it into force in November 2022. The rule text lives in NI 45-106 Prospectus Exemptions on the CSA site and on each provincial regulator’s website. The idea was to give small listed companies a cheaper, faster way to raise money from regular investors, not just accredited ones.
In exchange for skipping the prospectus, the company has to meet conditions. The main ones, in plain English:
- It must be a reporting issuer with equity listed on a Canadian exchange (TSX, TSXV, CSE) for at least 12 months, and be current on its continuous disclosure.
- It needs active operations. Shells and investment funds can’t use it.
- It must issue a news release and file a short offering document (Form 45-106F19), and post that document on its website.
- It must reasonably expect the money raised, plus what it has, to cover its business objectives and liquidity needs for 12 months.
- The offering has a size cap tied to market value and a cap on how much it can increase the share count over 12 months.
- The distribution has to close within 45 days of the news release, and it can’t be used to fund a significant acquisition or restructuring.
How is a LIFE offering different from a private placement?
Short answer: a regular private placement creates restricted shares that can’t be resold for four months and a day, while LIFE shares can be sold the moment the deal closes.
Most Canadian private placements rely on the accredited investor exemption. Under NI 45-102, those shares carry a restricted period of four months and a day. We break that clock down in when TSXV private placement shares become free trading. During those four months, placees can’t dump on the market, which is why traders often watch the hold expiry date.
LIFE removes that buffer. The resale restriction simply doesn’t apply. Three other differences matter:
- Who can buy: private placements are mostly limited to accredited investors. LIFE has no accredited requirement.
- Disclosure: a private placement usually comes with a news release and not much else public. LIFE requires the F19 offering document, which describes the business, use of proceeds and recent developments.
- Liability: the F19 document has to include a contractual right of action for misrepresentation, so buyers have recourse if the document is wrong.
Why free trading changes supply on day one
Here is a hypothetical example. A CSE explorer has 80 million shares outstanding and trades around $0.20. It announces a LIFE offering of 15 million units at $0.15, each unit being one share and one warrant.
If that were a regular private placement, those 15 million shares would be parked for four months. Under LIFE, anyone who bought at $0.15 can sell at $0.19 on closing day and keep the warrant for free. That’s roughly 19% more tradable shares hitting a thin book at once, held by people with a built-in profit. For flippers, the trade is obvious. For you, it means the closing date is a supply event, not a footnote.
The warrants matter too. Their strike price tends to act like a ceiling later, a mechanic we cover in how warrant overhang caps small-cap runs.
LIFE vs private placement vs bought deal: comparison table
A bought deal is the third common Canadian structure. An underwriter commits to buy the whole offering upfront, usually under a short form prospectus, then resells it. Here’s how the three stack up for a trader.
| LIFE offering | Private placement | Bought deal (prospectus) | |
|---|---|---|---|
| Rule | NI 45-106 Part 5A | NI 45-106 exemptions (mostly accredited investor) | Short form prospectus |
| Who can buy | Anyone, retail included | Mostly accredited investors | Public |
| Disclosure document | Form 45-106F19, on SEDAR+ and issuer website | News release, little else public | Full prospectus, receipted by regulators |
| Hold period | None, free trading on close | Four months and a day | None, free trading on close |
| Size limits | Capped by rule | No rule cap (exchange policies apply) | No rule cap |
| Who carries unsold shares | Issuer (agent deals are usually best efforts) | Issuer | Underwriter |
| Day-one supply impact | High, placees can sell immediately | Delayed until hold expires | High, buyers can sell immediately |
The pattern to notice: LIFE behaves like a prospectus offering for supply, but with paperwork closer to a private placement. Many companies also run a LIFE tranche alongside a regular private placement tranche, so part of the raise is free trading and part is held. Read the release carefully to see which is which. Our TSXV private placement guide covers the held side.
How do you spot a LIFE offering on SEDAR+ and the issuer website?
Short answer: look for the words “listed issuer financing exemption” in the news release, then find the Form 45-106F19 offering document on the company’s SEDAR+ profile and its website.
- Read the news release. A LIFE release has to say the offering is being made under the exemption and tell you where to access the offering document. If you see “LIFE” or “Part 5A,” you know the shares won’t be held.
- Search SEDAR+. Go to sedarplus.ca, search the company name, open its profile and sort filings by date. Look for the offering document filed around the release date. Our step-by-step SEDAR+ walkthrough shows the search screens.
- Check the issuer website. The rule requires the document to be posted there. It’s usually under Investors, Financings or News.
- Watch for the report of exempt distribution. After closing, the company files a Form 45-106F1, generally within 10 days. That confirms how much was actually sold.
What should traders check in a LIFE deal?
Use this checklist before you size a position into an open LIFE offering:
- Price vs market: how deep is the discount? Bigger discount, bigger incentive to flip.
- Size vs shares outstanding: divide new shares by current outstanding. That’s your day-one dilution.
- Warrants: strike, term and any acceleration clause.
- Tranches: how much is LIFE (free) and how much is a held private placement?
- Closing date: the deal must close within 45 days of the release. Mark it.
- Agent and fees: brokered deals often include broker warrants, which is more overhang.
- Use of proceeds: the F19 has to explain it. Vague language is worth noting.
Free-trading discounted supply tends to pressure price. On US small caps, Fockets Terminal data shows runs on a priced offering closed down 4.3% on average and 65% faded. That’s a different market with different rules, so don’t copy the number onto TSXV names, but the mechanic is the same: cheap, sellable paper meets a thin order book. More on that in why stocks drop after offering pricing.
CSE names deserve extra care because liquidity can be very thin, which makes any supply event louder. See the CSE risks most traders miss, and for the bigger picture on Canadian juniors, start at our Canadian small caps hub. Our Unfiltered DD deep dives pull these financings straight from the filings.
FAQ
Are LIFE offering shares free trading?
Yes. Securities issued under the listed issuer financing exemption are not subject to the four-month resale restriction that applies to most private placements. Buyers can sell once the offering closes.
Can retail investors participate in a LIFE offering?
The rule doesn’t require buyers to be accredited, so retail can participate. In practice, access depends on the agent or the company, and many deals fill through broker networks before most people hear about them.
How much can a company raise under LIFE?
When the exemption launched, the cap was the greater of $5 million or 10% of the company’s market value, up to $10 million over 12 months, and LIFE issuance couldn’t increase outstanding listed shares by more than 50% in 12 months. The CSA has since loosened some conditions, so check the current version of Part 5A and any CSA blanket orders before relying on a number.
Is a LIFE offering bullish or bearish?
Neither by itself. Funding can extend a company’s runway, which matters. But it adds free-trading, discounted supply, which can weigh on price around closing. Judge the terms, not the label.
Reading a LIFE deal more closely
What’s inside a Form 45-106F19?
The F19 is a short document with a fixed set of sections. You will usually find:
- Summary of the offering (price, size, units, warrants, closing date)
- Summary description of the business and recent developments
- Use of available funds, including the 12-month working capital statement
- Fees and commissions
- Purchasers’ rights
- Additional information, plus the date and certificate
Read the offering summary and the fees section first, since together they tell you how much new paper and how many broker warrants are coming. Issuers preparing a filing should work from the official form and instructions on the CSA website with their own counsel.
LIFE and junior explorers
Juniors use LIFE a lot, but the 12-month working capital condition can be awkward for companies that burn cash fast. A small raise may not credibly cover a year of exploration plus overhead, so some size up the deal or pair it with other funding. Unit structures with warrants are common, which means more potential shares later. When a raise has a free LIFE tranche plus a held private placement tranche, only the LIFE part can hit the market at close; the held part arrives when its hold expires. Flow-through units can also show up, covered in flow-through shares explained.
How TSXV pricing rules apply to LIFE deals
LIFE itself doesn’t set a minimum price; the exchange does. The TSXV Corporate Finance Manual defines a maximum allowed discount to market price that steps down as the share price rises, and the CSE has its own pricing policies. Check the current policy text on the TSX Group site rather than relying on remembered figures. A deal priced near the maximum allowed discount gives placees the most room to flip.
What does a LIFE offering cost the issuer?
Usually less than a prospectus, mainly because there is no regulator review cycle. Costs include agent commissions or finder fees, broker warrants, and legal and accounting work to prepare the F19. A prospectus adds a longer drafting and review process. The actual cash fees and broker warrant terms appear in the news release and the F19 fees and commissions section.
What protections do LIFE buyers have?
Mainly a contractual right of action. The F19 must describe buyers’ rights if the document contains a misrepresentation, generally rescission or damages against the issuer. That is narrower than the statutory rights prospectus buyers get, which can reach parties like underwriters and directors. The purchasers’ rights section of your F19 spells out exactly what applies.
Common retail concerns about LIFE dilution
The same worries come up again and again: placees flipping on close, discounts that feel too deep, warrants capping future runs, and allocations going to broker networks before retail hears about the deal. All fair. Our take is to quantify each one from the filings instead of reacting to the headline. If you want a second set of eyes on a specific deal, drop it in the free Discord and compare notes.
More questions traders ask
Has the LIFE exemption changed since 2022?
Yes. The CSA issued a coordinated blanket order that lets issuers raise more than the original cap, subject to conditions, and it has published further updates to Part 5A. Because these change the size limit and other conditions, pull current figures and effective dates straight from the CSA notices and blanket order before relying on any number.
Can US investors buy into a LIFE offering?
Not through LIFE itself. LIFE is a Canadian exemption and doesn’t cover US securities law, so any US sales need a separate US exemption. Check the news release for the jurisdictions where the offering is made, and talk to counsel or your broker. Background on US exempt offerings is on investor.gov.
Official sources for the LIFE rules
- NI 45-106 Part 5A: the rule text and conditions.
- CSA notices and staff guidance: how regulators interpret the exemption.
- CSA coordinated blanket order: the expanded size relief and its conditions.
- Form 45-106F19: the offering document and its instructions.
All are on the CSA website and provincial regulator sites.
If you want to see how other traders read Canadian financings in real time, ask questions and compare notes without anyone telling you what to buy, come hang out in our free stock trading Discord. Bring your own trade plan and your own risk sizing. We’ll help you pressure-test it.
Disclaimer: This post is for educational purposes only and is not financial, investment or legal advice. Nothing here is a recommendation to buy or sell any security. Trading small caps carries a high risk of loss. Always read the primary filings, check the current rules with your securities regulator, and do your own research before making any trading decision.
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This article is for education only and is not financial advice. Always do your own research and manage your own risk.
