Generally, preparing and filing an Offering Memorandum (OM) in Canada costs between $30,000 and $100,000+ CAD. These substantial costs are largely driven by the mandatory legal drafting fees and the strict regulatory requirement to provide audited financial statements to investors.
Raising capital for a growing business in Canadian hubs like Toronto, Calgary, or Vancouver is a major milestone. 💼 Many private companies want to accept investments from the general public but cannot afford the millions of dollars required to go public with a full prospectus. The Offering Memorandum (OM) exemption under National Instrument 45-106 provides a middle ground. It allows private businesses to sell shares to everyday Canadians, provided they disclose all material risks in a highly regulated, standardized document.
While cheaper than an Initial Public Offering (IPO), filing an OM is still a significant financial undertaking. You cannot simply write a business plan on a Word document and start collecting cheques. The Canadian Securities Administrators (CSA) mandate that the document follows strict formatting, contains no misrepresentations, and includes audited financial statements. Because the liability for mistakes is severe, most businesses rely heavily on an experienced Canadian corporate law firm and a licensed accounting firm to ensure full compliance as of June 2026.
Step-by-Step Process for an OM Filing in Canada
Navigating provincial securities laws requires extreme attention to detail. 📋 Whether you are filing with the Ontario Securities Commission (OSC) or the British Columbia Securities Commission (BCSC), the process generally follows these structured steps.
Step 1: Engaging Securities Counsel
Your first step is hiring a specialized securities lawyer. They will evaluate whether the OM exemption is actually the right fit for your capital-raising goals, or if a cheaper alternative like the Accredited Investor exemption applies. The legal team will coordinate the entire process, perform due diligence on your company’s corporate minute book, and ensure the directors fully understand their personal liability.
Step 2: Commissioning Audited Financial Statements
This is often the most time-consuming step. 🔍 Under Canadian securities laws, an OM almost always requires audited financial statements for the most recently completed financial year. You must engage a Chartered Professional Accountant (CPA) firm. If your startup has complex intellectual property or messy historical bookkeeping, completing the audit can take several months of intense financial scrutiny.
Step 3: Drafting the Form 45-106F2 (The Offering Memorandum)
Your law firm will draft the actual OM using Form 45-106F2. This document must clearly outline the company’s business model, use of proceeds, executive compensation, and all material risks (such as market competition or regulatory hurdles). The goal is plain-language disclosure, allowing a retail investor to make a fully informed decision.
Step 4: Filing Reports of Exempt Distribution
Unlike a prospectus, the OM itself is not usually pre-approved by the regulators before you start selling. 💻 However, once you close a round of funding, you must file a “Report of Exempt Distribution” (Form 45-106F1) along with a copy of the OM electronically through the mandatory national SEDAR+ system in accordance with National Instrument 13-103. You generally have exactly 10 days after the distribution to file these forms and pay the provincial regulatory fees.
How Much Does it Cost in Canada?
The costs of an OM are front-loaded, meaning you must pay them before you actually secure investment. As of 2026, budget carefully for the following in CAD:
- Legal Fees (Drafting & Due Diligence): Typically range from $20,000 to $60,000+ CAD, depending on the complexity of your corporate structure.
- Audit Fees (CPA): A standard audit for a private company usually costs between $10,000 and $30,000 CAD.
- Provincial Filing Fees: Varies by province. For example, the OSC charges a flat fee of $350 CAD for filing Form 45-106F1 (under OSC Rule 13-502 Fees). However, note that under proposed amendments published on April 30, 2026, the OSC plans to increase this activity fee to $500 CAD (tentatively scheduled to take effect in April 2027). In British Columbia, the BCSC fee is calculated as the greater of $200 CAD or 0.03% of the gross proceeds raised from BC residents.
- Marketing and Translation: If you are raising funds in Quebec, the OM must be translated into French, which can cost an additional $5,000 to $10,000 CAD.
How Long Does the Process Take?
You cannot launch an OM campaign overnight. ⏱️ From the initial kickoff meeting with your law firm, expect the process to take 3 to 6 months. The biggest bottleneck is almost always the financial audit. If your company’s books are perfectly organized, you might finish in 90 days. Once the OM is ready, it is generally valid until your next financial year-end, at which point it must be updated with fresh audited statements.
Comparison of Capital Raising Exemptions
| Exemption Type | Estimated Cost to Prepare | Who Can Invest? | Audit Required? |
|---|---|---|---|
| Offering Memorandum (OM) | $30k – $100k+ CAD | Anyone (subject to investment limits) | Yes, generally mandatory |
| Accredited Investor | $5k – $15k CAD | Only high-net-worth individuals/entities | No |
| Private Issuer (Friends & Family) | $2k – $5k CAD | Close personal network of founders | No |
| Full Prospectus (IPO) | $500k – $2M+ CAD | General public (unlimited) | Yes, strict public standards |
Frequently Asked Questions (FAQ)
Can I write the Offering Memorandum myself to save money?
It is legally possible but highly discouraged. An OM is a complex legal disclosure document. If you make a mistake, omit a material risk, or use improper formatting, you and the directors can be held personally liable for investor losses and face severe penalties from provincial securities commissions.
Is there an investment limit for people buying under an OM?
Yes. Under National Instrument 45-106, regular retail investors (“non-eligible investors”) are subject to a strict annual limit of $10,000 CAD, which cannot be increased under any circumstances. For “eligible investors,” the basic investment limit is $30,000 CAD per 12-month period. This limit can be increased up to $100,000 CAD only if they receive suitability advice from a registered portfolio manager, an investment dealer, or an exempt market dealer (EMD).
Do I need to hire a broker to sell my OM shares?
Not necessarily. Directors and officers of the company can generally distribute the securities directly to investors without registering as a dealer, provided they are not being paid a commission specifically for selling the shares. However, using an Exempt Market Dealer (EMD) can help you reach a wider audience.
Are OM rules the same across all of Canada?
Mostly, yes, thanks to National Instrument 45-106. However, there are still slight variations in reporting requirements, investor limits, and filing fees between provinces like Ontario, Alberta, and Quebec. Your law firm will ensure compliance in every specific province where an investor resides.
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