NCFA Canada | Craig Asano | Nov 28, 2013

In response to receiving a high volume of questions pertaining to the current status of equity crowdfunding regulations in Canada, NCFA is crowdsourcing a list of the most popular FAQs that we will host/maintain on the site (together with accurate and responses).

The goal is to get a tight set of Q&A to help educate NCFA members and others on the current state of equity crowdfunding in Canada, as well as the pros/cons of a potential exemption.

Equity Crowdfunding FAQ

To kick things off, NCFA has compiled a list of general questions (see below):

1. What is the definition of equity crowdfunding?

2. What is the current status of equity crowdfunding in Canada?

   

3. How do I know equity crowdfunding is right for me?

4. What are the other ways I can raise early stage seed capital (up to $1.5 million) for my company?

5. What are the challenges of regulating equity crowdfunding in Canada?

6. I’m interested in supporting the advancement of equity crowdfunding in Canada, how can I help?

7. What are the risks of equity crowdfunding for investors and how will investors be protected?

8. What are the expected returns on investment with equity crowdfunding in international jurisdictions where equity crowdfunding is permitted?

9. I’m a Canadian company, can I raise funds down in the U.S. or in other international jurisdictions using the internet?

10. How do I get listed on your website’s Crowdfunding Directory as a portal or provider?

11. I have an innovative hybrid equity-crowdfunding model.  Who should I speak with to help determine if it’s on the right side of up-and-coming equity crowdfunding regulations?

12. What educational resources are available to learn more about equity crowdfunding?

13. I have additional questions not on the FAQ?

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Participate: 

Please review the thought starter FAQ Questions (above) and enter your question(s) below with any new questions that you'd like answered pertaining to equity crowdfunding in Canada.  Alternatively, please feel free to email your questions directly to casano@ncfacanada.org:

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If you have a question about how equity crowdfunding in Canada works, the chances are that someone else has a similar question. Your feedback and participation is highly important to this knowledge gap/sharing process.  Please feel free to circulate amongst your network(s) or share via social media by clicking the "Share" button above.

Thanks for submitting your questions!

All the best,

NCFA Canada Team

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada crowdfunding hub providing education, advocacy and networking opportunities in the rapidly evolving crowdfunding industry. NCFA Canada is a community-based, membership-driven entity that was formed at the grass roots level to fill a national need in the market place. Join our growing network of industry stakeholders, fundraisers and investors. Increase your organization’s profile and gain access to a dynamic group of industry front runners. Learn more eBrochure | Prezi or contact us at casano@ncfacanada.org.

BoardSuite | Oscar Jofre | Nov 20, 2013

So much discussion goes on in Canada about whether we have equity crowdfunding or not.  Lawyers will tell you that Canada has had equity crowdfunding even before the USA, and they are correct.  But what separates Canada from the rest of the world is our 13 provincial regulators.

We would all like to see a single regulator to oversee Canada’s securities commission but that path is going to take time.  What does Canada offer for equity crowdfunding today.

Canada has three ways for equity crowdfunding
1.  Accredited Investor
2.  Offering Memorandum (OM)
3.  Saskatchewan

View the full infographic --> here

Source:  BoardSuite

Crowdfund Insider | By JD Alois | Nov 17, 2013

New York Times | By ROBB MANDELBAUM | Nov 14,103

A small business that elects to raise money from the masses should prepare for a lifetime of disclosure and fees. According to the recently proposed rules from the Securities and Exchange Commission, a crowdfunded company will have to file annual reports until either all of its crowdfunded securities have been bought out, it goes public or it is dissolved.

This level of transparency may discourage some companies, especially smaller ones, from taking advantage of the new channel for raising money that was designed specifically for them. But critics looking to accuse anonymous bureaucrats of stifling innovation should focus elsewhere: most of the strictures that appear in what will be known as Regulation Crowdfunding, especially those governing the companies that issue securities, come directly from Congress.

The crowdfunding provision, passed as part of 2012’s JOBS Act, allows companies to raise up to $1 million in a 12-month period from the general public under a looser set of rules than what’s normally required in a public offering. But some disclosure obligations remain, depending in part on how much money a company seeks.

A company raising $100,000 or less must provide two years of financial statements, certified by the principal executive, as well as its most recent tax return. Companies raising from $100,000 to $500,000 have to share only the financial statements, but the statements must be reviewed by an independent certified public accountant. Those raising more than $500,000 must have their financials audited.

In its proposed rules, the S.E.C. did modify Congress’s requirements slightly. To determine which tier of financial disclosure a company falls under, it must add the amount it is seeking to the amounts it has already raised through crowdfunded offerings in the previous 12 months. But though many people argued that forcing a young company to provide audited financials would be, as Slava Rubin, chief executive of the crowdfunding site Indiegogo, put it, a “massive deal breaker,” the S.E.C. did not budge.

Related:  Canadian resources for proposed US crowdfunding rules

Related: Summary of Canadian crowdfunding regulations

Financial statements “are generally self-scaling to the size and complexity of the issuer, which reduces the burden of preparing financial statements for many early stage issuers,” the agency explained in its proposal. “We would not expect that the required financial statements would be long or complicated for issuers that are recently formed and have limited operating histories.”

Along with the statements, all crowdfunded companies will have to supply a “narrative discussion of financial results,” similar to the management’s discussion and analysis that a publicly traded company must report.

And beyond financials, the law and the proposed rules require an issuing company to supply fairly detailed information about itself, its executives and the offering. About the offering, for example, a company has to explain how much money it intends to raise, how it plans to use the money, and what happens if it raises more than it expects. It has to identify the people who own more than 20 percent of the business, and it has to describe the business experience in the previous three years of its officers and directors.

While many of these specifics are spelled out in the JOBS Act, the S.E.C. has proposed several additional disclosures, including details about the company’s existing debt, its risk factors and some insider transactions. All told, it’s a fair amount of soul-baring. But apart from the financial statements, companies do have some flexibility about how they present all of this information. Some of it, for instance, could appear in a video or fancy graphic on the crowdfunding website, though a transcription of the video would also have to be filed with the S.E.C.

Once the company has sold its stock (or bonds, as the case may be), much of the required information that was presented at the offering will have to be updated each year in a report filed with the S.E.C. and posted on the company’s website. Eventually — perhaps because its shares have been bought up or because it has gone out of business — the company will have to file a “termination” report with the commission.

Though these requirements are, in fact, much less onerous than those faced by public companies, they will no doubt make crowdfunding a more expensive way to raise capital than some people may have imagined. Regardless of how much a company raises, the S.E.C. estimates that complying with its regulations would cost about $6,500 for the offering and $4,000 for each annual report.

Continue to the full article --> here