Accredited Investor Eligibility

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---
schema: foundry-doc-v1
title: "Accredited Investor Eligibility"
slug: accredited-investor-eligibility
category: investments
type: topic
content_type: topic
quality: complete
short_description: "The accredited investor exemption under NI 45-106 as a distribution channel for direct-hold limited partnership units alongside the prospectus offering: who qualifies, what the exemption permits, and the disclosure documentation required at the time of subscription."
status: active
bcsc_class: public-disclosure-safe
language_protocol: PROSE-TOPIC
last_edited: 2026-06-29
editor: woodfine-editorial
paired_with: accredited-investor-eligibility.es.md
---

Limited partnership units in a direct-hold solution are distributed through two channels:
a prospectus offering during the prospectus marketing period, which qualifies each LP as
a [[regulated-reporting-entity|reporting issuer]] under applicable Canadian securities legislation; and the accredited
investor exemption under National Instrument 45-106 *Prospectus Exemptions*, available to
institutional and high-net-worth investors. The accredited investor exemption permits the
sale of LP units to qualifying investors outside the prospectus marketing period, without
the public disclosure requirements of a prospectus filing.

## Key takeaways

- The accredited investor exemption permits the distribution of LP units to qualifying
  investors without a prospectus; the exemption does not reduce the issuer's ongoing
  [[about-disclosure-obligations|disclosure obligations]] as a reporting issuer under [[about-annual-reporting-cycle|NI 51-102]] once the LP reaches
  reporting issuer status.
- Eligibility is self-certified by the investor at the time of subscription using the
  form prescribed in NI 45-106; the issuer is responsible for taking reasonable steps
  to verify eligibility but is entitled to rely on accurate representations from the
  subscriber.
- Risk acknowledgement documents required for distributions to eligible investors who
  are individuals — not institutional buyers — must include specified statutory language
  under NI 45-106 s.2.3(5).

## The accredited investor exemption

National Instrument 45-106, adopted by the Canadian Securities Administrators, sets out
the exemptions from the prospectus requirement available in each Canadian province and
territory. The accredited investor exemption at s.2.3 is the most widely used exemption
for private placements to institutional and high-net-worth investors.

An accredited investor includes, among other categories:

**Financial institution.** A bank, trust company, insurance company, or other financial
institution regulated under federal or provincial statute.

**Pension fund.** A pension fund subject to supervision by a regulatory authority or
pension fund administrator whose primary purpose is investing pension assets.

**Registered investment dealer.** A registered dealer acting as principal or on behalf
of a managed account for a discretionary managed account client.

**High-net-worth individual.** An individual who, either alone or with a spouse, holds
financial assets (excluding real property) with an aggregate pre-tax value of at least
$1,000,000; or an individual whose net income before taxes exceeded $200,000 in each of
the two most recent calendar years and who reasonably expects to exceed $200,000 in the
current calendar year; or an individual whose net income before taxes, combined with that
of their spouse, exceeded $300,000 in each of the two most recent calendar years and who
reasonably expects to exceed $300,000 in the current calendar year; or an individual who
holds, alone or with a spouse, net assets of at least $5,000,000.

**Incorporated entity with net assets exceeding $5,000,000.** A corporation, limited
partnership, trust, or unincorporated entity that was not formed specifically to acquire
the securities being distributed and that has net assets of at least $5,000,000 on its
most recently prepared financial statements.

## Subscription and eligibility certification

At the time of subscription, each investor completes an accredited investor certificate —
Form 45-106F9 (in British Columbia) or equivalent provincial form — in which the investor
certifies which category of accredited investor they satisfy. For investors who are
individuals, an additional risk acknowledgement in the form prescribed in NI 45-106 Schedule
1 must be signed acknowledging, among other things, that the securities are not freely
tradable and that the investor has assessed the risk of the investment.

The issuer — represented by the general partner of the LP — retains the signed certificate
and any supporting representations for the period prescribed by applicable securities
legislation. The issuer does not independently verify the financial data underlying the
investor's self-certification, but is entitled to rely on the certificate in the absence
of red flags suggesting the certification is inaccurate.

## Transfer restrictions and secondary market compliance

LP units acquired under the accredited investor exemption are subject to a hold period
under applicable securities legislation before they may be resold to members of the public.
In most Canadian provinces, the hold period is four months from the date of distribution;
after the hold period, units may be transferred without a prospectus provided the transfer
complies with applicable exemptions (including the further sale to another accredited investor,
the exemption for securities of a reporting issuer distributed in the normal course through
a recognized exchange or alternative trading system, or other applicable exemptions).

Transfers of LP units are recorded on the partnership's unit register by the general partner
when a completed transfer form and any required documentation is received. The general partner
does not approve or disapprove transfers, but the update of the register is the mechanism by
which the acquiring investor becomes the registered holder of the transferred units and gains
access to investor reporting for the relevant asset.

## Interaction with continuous disclosure

An LP that has distributed units by way of a prospectus, or that crosses the statutory
threshold of 50 or more non-exempt holders of its securities, becomes a reporting issuer
subject to the full NI 51-102 disclosure regime. Reporting issuer status means the LP must
file annual audited financial statements, interim financial statements and MD&A, and an annual
information form on [[about-filing-systems|SEDAR+]] regardless of whether it conducts further distributions. The
accredited investor exemption does not provide any relief from these ongoing obligations
once reporting issuer status attaches.

## See also

- [[limited-partnership-structure]] — the LP structure through which direct-hold units are
  issued and governance rights exercised
- [[distribution-declaration-mechanics]] — how distributions are structured within the
  limited partnership framework