On March 20, 2014, the securities commissions in several
Canadian provinces published a proposed prospectus exemption
modelled on the Saskatchewan Equity Crowdfunding exemption adopted
on December 6, 2013 (the start-up crowdfunding exemption). All such
provinces are requesting comment on whether a similar exemption
should be adopted.
The start-up crowdfunding exemption would enable securities
crowdfunding by early-stage businesses and start-ups. An issuer
could distribute securities without a prospectus, provided:
the issuer raises no more than $150,000 per offering and offers
no more than twice per year;
no investor invests more than $1,500 per offering;
the offering is made on an on-line funding portal; and
the issuer provides a streamlined offering document to
investors through the portal.
The start-up crowdfunding exemption would allow a crowdfunding
portal to operate without being registered under securities
legislation, provided the portal:
does not provide investment advice;
ensures investors confirm online that they have read and
understood the issuer's offering document and the risk warnings
required under the exemption; and
ensures that all funds are held in trust for investors until
the issuer raises the minimum amount required to close the
British Columbia, Quebec, New Brunswick, Saskatchewan, Manitoba
and Nova Scotia have published the same crowdfunding terms for
comment. Ontario has also published a crowdfunding proposal for
comment, which has slightly different terms.
The BCSC invites comments until June 18, 2014. A copy of the BC
notice can be found here.
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