Frequently Asked Questions
There is no cost to meeting with our team, and all sale compensation is paid by the investment issuers and fully disclosed upfront and before you make any decisions. Feel free to read our Client Disclosure Information form for more information on us and our relationship with our clients.
What is an Exempt Market Dealer, or EMD?
- An Exempt Market Dealer (often abbreviated to “EMD”) is a firm that has been licensed to distribute investment securities are not publicly traded after being cleared by a prospectus, but rather have been exempted from the requirement through their adherence to the rules and regulations of each province where the EMD is registered to operate. These investments are often referred to as “private capital” because they are not publicly traded like other stocks and securities.
All EMDs must be registered under the securities regulation of the provinces where they perform dealing activities before they can sell private capital. They must also have in place operational standards, policies and procedures systems that make sure they know their investments, know their clients, resolve complaints in a timely fashion, carry reasonable insurance, maintain appropriate knowledge and proficiencies, and most importantly treat their clients “fairly, honestly and in good faith”.
More information on EMDs and their regulatory obligations can be found at your local Securities Regulatory Authority, the National Exempt Market Association, or the Private Capital Market Association of Canada. Whether you’re investing in public stocks, mutual funds or private capital, you have rights as an investor.
- What makes private capital investments different from publicly traded stocks?
In Canada, non-public companies (companies not listed on a stock exchange) seeking investment are not allowed to issue securities unless they file a prospectus, which is a full disclosure document filed with and cleared by a securities regulator. Private capital investment, referred to as Exempt Market Investments, can be purchased with an exemption from the prospectus requirement. The regulated ability to go to the capital markets without a prospectus has given Canadians access to a unique type of investment that acts and performs differently than traditional investments, one which can act as a diversifying agent to help reduce risk. It can also allow investors to acquire tangible assets and other unique investment opportunities.
- What risks are there in investing in exempt markets?
There are risks in all kinds of investing, including exempt markets. However, if you know what those risks are, you can evaluate and manage them. There are some risks inherent investing in exempt market products that are shared by exempt markets, such as lack of liquidity or the inability to resell your investment when you may want to. However, unlike publicly traded stock, private capital investments usually cannot be resold and have very little redemption rights (where the company is required to buy them back). This can result in your investment being tied up for a period of time. Private companies know this, though, and understand that their reputation lies on their ability to fulfill their defined business objectives profitably.
- How can I purchase private capital investments if they aren’t traded on an exchange?
To purchase private capital investments in the Exempt Market, you must qualify for an exemption from the prospectus requirement. How these exemptions can be obtained varies between provinces. We at Capital Street group will help you determine whether or not you qualify to purchase Exempt Market Products, and once you have been qualified we will use our expertise to help you develop the proper investment strategy to reach your goals. We will provide for you a list of investments, each individually reviewed and approved by our research team , can form an ideal introduction to suit your financial situation and your financial goals.
- Are private capital investments RRSP, RRIF, RESP, LIRA eligible?
Many of the investments that we distribute can be purchased into a registered plan. As part of our objective of bringing private capital investing to Canadian retail investors, we work with many of our issuers to create platforms that qualify for registered plans under the Income Tax Act (Canada).
- Where can I get more information?
Contact one of our team members for more information. We will work with you to help find out what solutions work for you. There is no cost to meeting with our team, and all sale compensation is paid by the investment issuers and fully disclosed upfront and before you make any decisions. Feel free to read our Client Disclosure Information form for more information on us and our relationship with our clients.