The U.S. House of Representatives recently passed a "crowdfunding" bill
that would allow companies to sell securities to individual
investors via non-traditional means such as social networking
websites. Specifically, the proposed amendments to the Securities Act of 1933 would
provide a registration exemption for transactions involving
individual investments limited to the lesser of $10,000 and
10% of an investor's income. The amount raised under the
exemption would also be limited to an aggregate annual amount of $1
million, or $2 million if the issuer provided potential investors
with audited financial statements. The issuer or intermediary would
have to comply with certain requirements in order to utilize the
exemption, including with respect to providing investor warnings,
and resales of any securities purchased would be limited for one
On the Canadian front, regulators are similarly considering
whether to make changes to the rules respecting the circumstances
under which securities can be issued without a prospectus.
Specifically, regulators are looking at the "accredited
investor" and "$150,000 minimum investment amount"
exemptions that are commonly used to raise financing on a
prospectus exempt basis. As discussed in a November 2011 post,possible
options for regulators include keeping the status quo,
retaining the exemptions with adjusted thresholds, limiting the use
to certain investors (such as institutional investors), using
alternative qualification criteria or imposing other investment
The consultation period ended on February 29. Whether U.S.
developments ultimately influence the path taken by Canadian
regulators remains to be seen.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).