Canadian securities regulators eye rules on crowdfunding

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The Toronto Sun | Alastair Sharp, Reuters | Feb 27, 2014

KickstarterTORONTO - Canada's provincial securities regulators are looking to extend their jurisdiction to cover crowdfunding, the grass-roots form of fundraising being pursued by a growing number of start-ups and small ventures.

The move is part of a broader plan to revise rules around who is qualified to invest in a publicly-traded company without first seeing a prospectus.

Prospectus documents are designed to disclose the risks of buying into a company and protect vulnerable buyers. But some critics see them as onerous requirements that can hamper fund-raising for young enterprises.

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The Canadian Securities Administrators (CSA), the council of provincial regulators, said on Thursday they aim to strike a balance between making more cash available to promising start-ups and ensuring investors aren't stretching beyond their means to invest in risky bets.

The proposals, which are open to public comment until the end of May, include a framework to manage the growth of online crowdfunding sites pitching private opportunities to investors who might then decide to invest between  $20,000 and $150,000.

The Ontario Securities Commission, the biggest of the country's provincial regulators, said the proposed amendments would require changes to its definition of so-called accredited investors, who can legally invest without seeing a prospectus.

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