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Accredited Investor Rules in Canada (Including Ontario Considerations)

General

Key Takeaways

  • Accredited investors may gain access to private investments that are not available to the general public.
  • Accredited investors must meet higher income or asset thresholds than eligible investors.
  • The rules governing exempt market investing in Canada are primarily established under National Instrument 45-106 – Prospectus Exemptions (NI 45-106).
  • In Ontario, exempt market investments are overseen by the Ontario Securities Commission (OSC).
  • Investors purchasing private securities are generally required to complete eligibility and risk acknowledgement documentation before investing.
  • Private alternative investments can provide diversification, income potential, inflation protection, and access to sectors not typically available in public markets.

The private investment space in Canada is a dynamic market that can offer attractive and differentiated investment opportunities. Unlike public markets, however, access to many private investments is limited to investors who meet specific regulatory requirements.

You may have heard the term “accredited investor” — but what does it actually mean, and why do they matter?

Participation in most private offerings within Canada’s exempt market is governed by eligibility criteria established by Canadian securities regulators. These rules are designed to help ensure investors have the financial capacity, investment knowledge, or professional guidance appropriate for higher-risk and less-liquid investments.

For Ontario residents, exempt market activity falls under both NI 45-106 and the oversight of the OSC. While the rules are broadly harmonized across Canada, Ontario investors should understand that certain exemptions, forms, suitability obligations, and dealer registration requirements may differ slightly from those in other provinces.

This guide is designed to help investors better understand accredited and eligible investor classifications and how they relate to accessing private alternative investments.

What Is the Exempt Market?

In Canada, the exempt market provides access to private investment opportunities offered outside the traditional prospectus system used for publicly traded securities.

These investments may include:

  • Private equity funds
  • Private credit strategies
  • Real estate and mortgage investment funds
  • Infrastructure investments
  • Venture capital opportunities
  • Hedge funds and alternative strategies

Because these offerings are exempt from many of the disclosure requirements associated with public securities, investors are expected to either meet higher financial thresholds or receive professional investment advice before participating.

Private investments are generally considered:

  • Less liquid than publicly traded investments
  • Longer-term in nature
  • More complex structurally
  • Higher risk, but with the potential for enhanced returns and diversification benefits

How Does an Investor Qualify as an Accredited Investor in Canada?

For investors who qualify, accredited investor status provides access to a broader range of exempt market investments without investment limits.

Under NI 45-106, accredited investors are individuals or entities who meet at least one of the following criteria:

Individual Accredited Investor Criteria

Income Test

Earned more than $200,000 individually before taxes in each of the two most recent calendar years, and reasonably expects to maintain that income level in the current year; or earned more than $300,000 combined with a spouse in each of the two most recent calendar years.

Financial Asset Test

Owns net financial assets alone or with a spouse Owns financial assets with an aggregate realizable value exceeding $1,000,000 before taxes, net of related liabilities.

Financial assets generally include:

  • Cash
  • Stocks and bonds
  • Mutual funds and ETFs
  • GICs and investment accounts

Primary residences and other real estate holdings are generally excluded unless held through qualifying financial structures.

Net Asset Test

Has net assets of at least $5,000,000, either alone or together with a spouse. Net assets equals the value of all assets minus the value of all debt incurred to finance (or currently secured by) the assets.

Professional Registration Test

Is currently registered under Canadian securities legislation as an adviser or dealer representative.

Entity Accredited Investor Criteria

  • Entities with net assets of at least $5,000,000
  • Entities wholly owned or controlled by accredited investors

In Ontario, investors are typically required to complete:

  • An accredited investor certificate or schedule
  • Subscription documentation
  • Risk acknowledgement forms where applicable

Securities dealers and portfolio managers registered in Ontario have a regulatory obligation to assess investment suitability, even where an investor qualifies as accredited.

For Ontario investors, additional risk acknowledgement forms confirm understanding of:

  • Potential loss of capital
  • Illiquidity
  • Lack of public market pricing
  • Long investment horizons

An OM is a disclosure document and informational resource — it is not a guarantee of performance or protection against loss.

Why Accredited Investors Choose Private Alternative Investments

  • Diversification Beyond Public Markets: May help reduce portfolio volatility.
  • Access to a Range of Opportunities: Exposure to private businesses, real estate, infrastructure, and more.
  • Potential for Enhanced Returns: Certain strategies aim for higher long-term returns.
  • Income Generation: Some investments provide regular income streams.
  • Inflation Protection: Real assets may help preserve purchasing power.
  • Lower Correlation: May provide stability during market volatility.
  • Estate and Wealth Planning: Useful for long-term wealth strategies.
  • Access to Institutional Strategies: Exposure to professional management.

Important Considerations and Risks

  • Illiquidity
  • Limited transparency
  • Valuation complexity
  • Leverage risk
  • Manager risk
  • Potential loss of capital

Investors should carefully review all offering documents and consult with qualified legal, tax, and financial professionals before investing.

Working with a skilled financial advisor or portfolio manager can help assess whether private alternatives align with financial goals, liquidity needs, and risk tolerance.

Suitability (General): This material is not to be construed as an offer or solicitation. The investments mentioned may not necessarily be suitable for all clients. Contact your Advisor to discuss your individual investment needs. Diversification: No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Diversification or asset allocation doesn’t guarantee a profit or protect against the risk of loss in any market. Past performance does not guarantee future results. Combined Opinion & Market Commentary This is not an official publication of Manulife Wealth Inc. The views, opinions and recommendations contained in this publication are those solely of the author and this publication does not express the views, opinions or recommendations of Manulife Wealth. This publication is not an offer to sell, or a solicitation of an offer to buy, any securities. This publication is not meant to provide legal, accounting, account or other advice. As each situation is different, you should seek advice based on your specific circumstances. Please call to arrange for an appointment. Manulife Wealth makes no representation or warranty, express or implied, as to the accuracy, completeness or correctness of the information contained in this publication.