The Exempt Market describes a portion of Canada’s capital markets where securities are sold without the protections associated with a prospectus (a document providing detailed information about the security and the company offering it).
An Exempt Market Dealer is a bonded and regulated Entity that offers the investing public certain protections previously not offered with private investment offerings.
Investing in the Exempt Market allows me to participate in companies that are not large enough to be a public company. It provides me an opportunity to diversify my investment portfolio by adding an asset class other than stocks, bonds and cash.
That’s great but what is even better than diversifying my portfolio is that I can do it without additional money. Most Exempt Market investment offerings allow you to use your RRSP savings to create passive income. You transfer money from your RRSP (Registered Retirement Savings Plan) or TFSA (Tax Free Savings Account) into an investment offering. Once the investment cycle is over the capital investment is transferred back to your RRSP or TFSA and you decide what to do with your returns on the investment.
I was excited to learn that the Exempt Market securities offer me more products to diversify my portfolio to achieve my financial goals. In this season of my life, my goal is to retire comfortably.
The Exempt Market – Things to Know
- Investments like debt, equity, asset-backed securities, investment funds and derivatives can be sold in the exempt market.
- Prospectus exemptions can help businesses because it lets them raise money without the time and expense of preparing a prospectus. Selling securities without a prospectus does not mean there is no registration requirement.
- Some scammers pitch fraudulent investments as “exempt” securities.
- In Canada, anyone who sells securities or advises other people or businesses on securities must be registered with the securities regulatorin each province or territory where they do business, unless an exemption applies. To check the registration status of a person or company, contact the Securities Commission.
*All content in this eBook is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing in this eBook constitutes professional and/or financial advice, nor does any information constitute a comprehensive or complete statement of the matters discussed or the law relating thereto.