What is Exempt Market Dealer?
An Exempt Market Dealer (“EMD”) is a securities dealer registered under Canadian securities laws to participate in the distribution of securities in the exempt market. The exempt market allows issuers to raise capital without filing a prospectus where an available prospectus exemption applies.
Private investments, including the Limited Partnership units offered by CPI Capital-sponsored investment vehicles, are not publicly traded securities and may be distributed to eligible investors in reliance on applicable prospectus exemptions.
CPI Capital uses a designated registered EMD for the distribution of its Canadian investment offerings. The EMD provides important regulatory and investor-protection functions as part of the investment process.
Registered dealers are subject to regulatory requirements that include Know Your Client (KYC), Know Your Product (KYP) and suitability obligations. These requirements are intended to ensure that the dealer understands both the investor and the investment being offered and, where required, determines whether an investment is suitable for a particular investor.
For CPI Capital investors, the designated EMD independently conducts the applicable investor onboarding, KYC, investor eligibility/accreditation and suitability processes before an investment is accepted.
WHAT ARE THE BENEFITS OF HAVING AN EMD?
A registered Exempt Market Dealer (“EMD”) provides an important layer of regulatory oversight and investor protection when participating in private-market investments.
As part of its role, an EMD conducts due diligence on the issuer and investment opportunity in accordance with applicable securities laws and the EMD’s own compliance procedures. This may include reviewing the offering, its structure, supporting documentation, the issuer and the management team behind the investment.
The EMD also performs important investor-level regulatory functions. This includes Know Your Client (KYC), Know Your Product (KYP), investor eligibility and, where applicable, suitability assessments to determine whether an investment is appropriate for a particular investor.
An EMD’s review should not be interpreted as a guarantee of an investment’s performance or as eliminating the risks associated with private investments. Rather, the involvement of a registered EMD provides an independent, regulated process through which the investment and prospective investor are reviewed before a subscription is accepted.
For Canadian investors participating in CPI Capital-sponsored investment opportunities, a designated registered EMD independently conducts the applicable investor onboarding, KYC, investor eligibility/accreditation and suitability processes as part of the subscription process.