OSC Staff Consultation Paper 45-710: Crowdfunding Questions
Below is a list of Staff Consultation Questions that the OSC is seeking public comment and feedback on until March 8, 2013, as per the OSC Staff Consultation paper 45-710, released on December 14, 2012.
NCFA Canada has been invited to meet directly with the OSC on February 28, 2013 to provide feedback on the Staff Consultation Questions outlined below – we are currently preparing our response.
Member Participation: please send us your feedback and detailed responsesto help us prepare a response on your behalf at email@example.com.
- Would a crowdfunding exemption be useful for issuers, particularly SMEs, in raising capital?
- Have we recognized the potential benefits of this exemption for investors?
- What would motivate an investor to make an investment through crowdfunding?
- Can investor protection concerns associated with crowdfunding be addressed, and if so, how?
- What measures, if any, would be the most effective at reducing the risk of potential abuse and fraud?
- Are there concerns with retail investors making investments that are illiquid with very limited options for monetizing their investments?
- Are there concerns with SMEs that are not reporting issuers having a larger number of security holders?
- If we determine that crowdfunding may be appropriate for our market, should we consider introducing it on a trial or limited basis? For example, should we consider introducing it for a particular industry sector, for a limited time period or through a specified portal?
- Should there be a limit on the amount of capital that can be raised under this exemption? If so, what should the limit be?
- Should issuers be required to spend the proceeds raised in Canada?
- Should there be limits on the amount that an investor can invest under this exemption? If so, what should the limit be?
- What information should be provided to investors at the time of sale as a condition of this exemption? Should that information be certified and by whom?
- Should issuers that rely on this exemption be required to provide ongoing disclosure to investors? If so, what form should this disclosure take?
- Should the issuer be required to provide audited financial statements to investors at the time of the sale or on an ongoing basis? Is the proposed threshold of $500,000 for requiring audited financial statements (in the case of a non-reporting issuer) appropriate?
- Should rights and protections, such as anti-dilution protection, tag-along rights and pre-emptive rights, be provided to shareholders?
Funding Portals and other Registrants:
- Should we allow investments through a funding portal (similar to the funding portals contemplated by the crowdfunding exemption in the JOBS Act)? If so:
- What obligations should a funding portal have?
- Should funding portals be exempt from certain registration requirements? If so, what requirements should they be exempted from?
- Should a registrant other than the funding portal be involved in this type of distribution? If so, what category of registrant? Should additional obligations be imposed on the registrant?
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The National Crowdfunding Association of Canada is Canada’s Crowdfunding Advocate. Newly formed, dynamic and inclusive, NCFA Canada works closely with industry groups, government, academia, other business associations and affiliates to create a strong and vibrant crowdfunding industry and voice across Canada.