OSC Approves Ontario-Only Crowdfunding Portal for Accredited Investors
Cassels Brock & Blackwell LLP | Posted By Brian Koscak on Jun 21, 2013
On June 20, 2013, the Ontario Securities Commission (OSC) issued an exemptive relief order (the Order) to permit the sale of securities over the internet to accredited investors, subject to certain terms and conditions, by Social Venture Connection (MaRS SVX), the non-profit part of the MaRS Discovery District in Toronto, a site dedicated to helping entrepreneurs. The Order provides relief from certain know-your-client (KYC) and suitability requirements contained in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103).
The Order says MaRS SVX is proposing to operate an online portal (the Portal) bringing together accredited investors and issuers that aim to solve social or environmental challenges in Ontario. MaRS SVX will be registered with the OSC as a restricted dealer; not an exempt market dealer. MaRS SVX is required to comply with customary gatekeeper KYC requirements, such as establishing the identity of a client, confirming that a client is an accredited investor, and complying with anti-money laundering requirements. No transactions will be executed, settled or cleared through the Portal; it is a matching service provider. MaRS SVX will not issue securities or have related or connected issuers which is meant to address any conflict of interest concerns. The Order is subject to certain investment limits and terms and conditions as set out in the Order. For example, accredited investors will be limited to investing a maximum of $25,000 in a single offering and a maximum of $50,000 in total in all offerings on the Portal in a calendar year unless the investor provides MaRS SVX with a letter from a registered dealer confirming that such dealer has fulfilled its KYC/suitability requirements under NI 31-103 and that the offering is a suitable investment for the investor. The Order is time-limited and will expire on the earlier of (i) two years and (ii) 90 days after any material change in MaRS SVX’s business, operations or capital. The Order may be amended by the OSC on written notice to MaRS SVX. The Order is for Ontario only. It is presently not available in other jurisdictions in Canada.
Link to the order on the OSC’s website: here
Brian Koscak is a Partner at the law firm of Cassels Brock & Blackwell LLP located in Toronto, Ontario and practices in the area of corporate and securities law. Brian is the Chairman of the Exempt Market Dealers Association of Canada, a national non-for-profit organization representing exempt market dealers, issuers and compliance professionals across Canada. Brian is also a member of the Ontario Securities Commission’s Exempt Market Advisory Committee which is considering new ways to raise capital in Ontario, including through equity crowdfunding. Brian is actively involved in developing a viable Crowdfunding framework for Canada. He has spoken at numerous Crowdfunding conferences, events and webinars, met with securities regulators across Canada to discuss the many aspects of Crowdfunding and is actively engaged with clients in the space and more generally with the prospectus and registration issues involving selling securities over the internet.
Partner, Cassels Brock & Blackwell LLP
(416) 860 2955