Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Equity Crowdfunding, Alternative Funding
Six Provinces Propose a New Start-Up Crowdfunding Exemption Based on the Saskatchewan Crowdfunding Exemption Model
Venture Law Corporation | Alixe Cormick | March 21, 21
On March 20, 2014, the securities regulators in British Columbia (BC), Manitoba (MB), New Brunswick (NB), Nova Scotia (NS), Quebec, (QU), and Saskatchewan (SK), proposed a crowdfunding specific prospectus exemption. This exemption is modeled after the crowdfunding exemption adopted in the province of Saskatchewan on December 6, 2013[1]. The exemption is light on requirements for both issuers and online funding portal operators. The proposal is open for comments until June 18, 2014.
Basic Requirements of this New Exemption
Issuers relying on this exemption to raise capital and all investors participating in an offering must be a resident one of the provinces where this exemption has been adopted. The exemption is not available to reporting issuers or investment funds. Issuers can offer any type of security other than derivative type securities.
The amount issuers can raise under this exemption is capped at $150,000 per offering. Issuers can rely on this exemption twice in a 12 month period raising an aggregate total of up to $300,000 during this period.
Each investor may invest up to $1,500 in an offering relying on this exemption. There is no limit on the number of equity crowdfunding offerings by different issuers an investor can invest in under the exemption.
Related: Canadian Regulators Propose Rules for Crowdfunding of Start-ups
Issuers planning on using this exemption must provide 10 days advance notice to their provincial securities regulators by filing basic information about their company, the offering and each promoter, director, officer and control person related to the company. They must use an online funding portal to sell their securities. They cannot pay a fee or commission for the offering to anyone other than the online funding portal. There is no requirement to provide financial statements or any ongoing obligations to provide information annually to investors or regulators.
Online funding portals posting offerings relying on this exemption are not required to be registered as a registered dealer or in any other capacity. They are only required to provide 30 day advance notice to each provincial securities regulator in the province(s) they intend to act as a funding portal under this exemption. Funding portals are not subject to the “know your client” or “client suitability” rules imposed on registered dealers and other registrants. The requirements imposed on funding portals are very light. The head office of the portal must be located in one of the provinces where the exemption is available and its promoters, directors, officers and control person must be Canadian residents (this is a change over the original Saskatchewan crowdfunding exemption).
Can an Equity Crowdfunding Specific Exemption Using the Saskatchewan Model Work for the Rest of Canada?
I like the Saskatchewan equity crowdfunding model as the crowdfunding market using this exemption is left to grow and evolve on its own with minimal regulatory interference. The main drawback is that with light rules comes a low cap on how much issuers can raise and how much investors may invest under this exemption . These caps are how regulators believe investors can be protected from large frauds and poor quality investments. Assuming no fraud or major catastrophes, I can see these caps being raised over time as regulators become more comfortable with equity crowdfunding. This is also not the only equity crowdfunding exemption under consideration by MB, NB, NS, QU and SK. These five provinces are also considering adopting the Ontario crowdfunding exemption model.
Your written support is necessary to guarantee this exemption will be adopted by the securities regulators in the provinces and territories who put forward the proposal. I also encourage you send a letter to your local securities regulators in support of the exemption even if your province or territory did not participate in proposing this start-up equity crowdfunding exemption.
The New Start-Up Crowdfunding Exemption Rules and Forms
BC Release
- BC Securities Commission publishes new securities crowdfunding exemption for comment
- BC Notice 2014/03 – Notice and Request for Comment on Start-Up Crowdfunding
MB, NB, NS, QU and SK Release
- Multilateral CSA Notice
- Blanket Orders on the Start-Up Crowdfunding Prospectus and Registration Exemption in Québec and Forms
- CSA Staff Notice 45-314: Consolidated List of Current CSA Exempt Market Initiatives
[1] For more information about the Saskatchewan crowdfunding exemption see: Saskatchewan Adopts First True Crowdfunding Private Placement Exemption in Canada.
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Disclaimer
This blog is not intended to create, and does not create an attorney-client relationship. You should not act or rely on information on this blog post without first seeking the advice of a lawyer. This material is intended for general information purposes only and does not constitute legal advice. For legal issues that arise, the reader should consult legal counsel.
Author: Alixe Cormick is the founder of Venture Law Corporation in Vancouver, British Columbia and a member of the Advisory Board of the National Crowdfunding Association of Canada. You can reach Alixe by phone at 604-659-9188
, by e-mail at acormick@venturelawcorp.com, on twitter @AlixeCormick or on Google+.
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 About Us | Prezi or contact us at casano@ncfacanada.org.
BCSC Proposes New Startup Crowd Funding Rules
BC Business | Jacob Parry | Mar 20, 2014
Online capital raising would be an option for businesses.
Companies would be able to raise capital online from widened pool of non-accredited investors, according to proposed rules
The B.C. Securities Commission put forward a proposal that would allow equity-based crowd funding, as Canada’s security regulators propose new exemptions that would change how much and from whom early-stage companies raise capital.
B.C.’s proposal is modelled on changes made by Saskatchewan’s securities regulator last December that allow the general public to buy shares and ownership in small companies. Under the proposed exemption, early-stage private companies could raise up to $150,000 from non-accredited investors without issuing a prospectus.
B.C. joined other members of the Canadian Securities Administrators in publishing the proposed start-up crowd-funding exemption for comment. CSA is an umbrella organization comprising the provincial securities regulators. Regulators in B.C. and Alberta however did not join the other provinces in a second, more extensive proposed exemption.
Related: [Breaking] Canadian Securities Regulators propose new crowdfunding exemptions
Under the proposed rules, startups in B.C. would be allowed to distribute securities without a prospectus. A company could raise up to $150,000 per offering, with up to two offerings a year. Each investor would be allowed to up to $1,500 per offering via online portals similar to Kickstarter or Indiegogo.
"We feel that this crowd funding model could address a gap in the financing needs of startup and early-stage companies in B.C.," said Brenda Leong, chair of the BCSC, in a statement. "We think it could fit well within the existing exempt market regime available to small businesses."
Proponents of equity crowd funding, many of whom are still sifting through the changes, see it as a way to raise capital, selling equity in a company to unaccredited investors without engaging in the costly process of going public.
“This is going to move the needle for capitalization,” says Craig Asano, executive director of the Toronto-based National Crowdfunding Association of Canada, which has been pushing for these changes for the last few years. The changes "will fill the early-stage funding gap for companies,” he says.
View: Join NCFA Canada and Help Build a Vibrant and Sustainable Crowdfunding Industry Across Canada
“I think its’ excellent, particularly for the tech industry,” says Alixe Cormick, a Vancouver securities lawyer at Venture Law Corp. Despite B.C.’s fundraising cap of $150,000, which is low compared to public fundraising, Cormick says that the changes will allow a number of people to get to the early-stage off the ground. With the changes, companies will not need audited financial statements and there will be no net worth or annual income restrictions on who can invest in a private company, according to Cormick.
Continue to the full article --> here
Canada regulators propose rules for crowdfunding of startups
Reuters Canada | By Alastair Sharp | March 20, 2014
TORONTO (Reuters) - The power of the crowd may soon be harnessed to help fund business startups in Canada, with several provincial securities regulators publishing proposed rules on Thursday that would allow large numbers of people to invest small amounts in promising projects.
The rule changes could offer a lifeline to the country's technology community, which often turns to U.S. investors and companies to fund early-stage growth.
Crowdfunding has proven a popular way for artists and others to raise money, but in Canada it has not involved equity stakes in projects.
The Ontario Securities Commission, the country's biggest capital markets watchdog, said its new rules would allow registered online portals to collect up to C$2,500 ($2,200) per investment from small-scale investors.
Such investors would be allowed to invest up to a total of C$10,000 a year, while the companies would be limited to raising C$1.5 million per year from crowdfunding.
Related: [Breaking News] OSC Proposes 4 new Capital Raising Prospectus Exemptions
"Today we have proposed new tools, which will transform Ontario's exempt market by providing greater access to capital for businesses and expanding investment opportunities for investors," OSC Chairman Howard Wetston said in a statement.
And it is not just tech companies that stand to benefit. Real estate, among others, stands ready to accept grass-roots funding.
"It's a new opportunity to raise capital and get others that traditionally aren't involved into the real estate game," said Tim McKillican, the president of Open Avenue, a private real estate developer and manager that owns almost 1,000 apartments, mostly in Ontario's Kitchener-Waterloo region.
Without the new rules Open Avenue must win funding from rich investors judged sophisticated enough to invest wisely or otherwise able to sustain a loss of their capital.
"It's not like your net worth determines your sophistication in investing," McKillican said.
Regulators in Alberta, Quebec, Saskatchewan and New Brunswick published a joint proposal similar to the OSC document.The releases start a 90-day consultation period.
British Columbia, another of Canada's biggest capital market jurisdictions, said it was seeking comment on whether it should adopt rules that less-populated Saskatchewan introduced in December.
Related: Canadian Securities Regulators Propose New Crowdfunding Exemptions
Under those rules, single investments would be limited to C$1,500 and businesses would be able to raise only two C$150,000 rounds a year.
Bill Rice, who heads both the Alberta Securities Commission and an umbrella group of Canadian regulators, said serious effort has been put into aligning the proposals.
"Differences in regulatory approach reflect differences in local experience and feedback," he said. "Our intent is to review the submitted comments and achieve as much harmonization as possible before the final rules come into force."
Backers of such grass-roots investments have been waiting for months for these proposals, which if adopted would give the nascent model an injection of credibility.
"This is just the tip of the iceberg. These markets have tremendous amounts of potential and this is step one," said Craig Asano, thefounder of the National Crowdfunding Association of Canada, who hopes a secondary market will emerge.
Continue to the full article --> here
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 About Us | Prezi or contact us at casano@ncfacanada.org.
OSC crowdfunding rules will limit funds raised to $1.5-million a year
Financial Post | Barbara Shecter | March 20, 2014
The Ontario Securities Commission unveiled much-anticipated rules Thursday to allow equity crowdfunding, a style of investing where investors pool their money in exchange for securities in a small start-up company or venture.
The rules limit companies from raising more than $1.5-million during a 12-month period and restrict investors to a maximum of $10,000 invested through crowdfunding over a calendar year.
“We think that crowdfunding through an appropriately regulated crowdfunding portal can be a viable method for start-ups …to raise capital,” the OSC said Thursday.
Canada’s largest capital markets watchdog has held extensive consultations to try to balance the needs of firms hungry for funding with concerns that the largely online crowdfunding investing forums will provide a new venue for fraudsters.
Under the proposed new rules, which won’t come into force until after a 90-day comment period to allow for feedback and possibly revisions, investors can withdraw their investment up to 48 hours before any offering closes. Investors will be limited to a $2,500 investment in any single venture, and must sign a “risk-acknowledgement form” that says the investor could lose all the money invested.
Related:
There are also tight restrictions to ensure that the company raising money and its board of directors have strong Canadian connections.
Howard Wetston, chair of the OSC, said the new rules “will transform Ontario’s exempt market” by providing greater access to capital for businesses and expanding investment opportunities.
“We have done so in a balanced and responsible manner that is intended to facilitate capital raising while maintaining an appropriate level of investor protection,” he said.
In December, about a year after the OSC began mulling crowdfunding in the wake of new legislation in the United States, Canadian market participants were informed that the regulator would propose a prospectus exemption to allow crowdfunding this year, along with an accompanying registration framework for online funding portals.
A consultation paper circulated by the OSC last year suggested capping the amount raised by a single entity at $1.5-million in any 12-month period, and also limiting the amount that could be pledged by individual investors.
Crowdfunding will be part of the roughly $100-billion exempt market, which has historically been subject to less regulatory scrutiny because it does not require companies to file expensive and detailed prospectus documents before selling securities to investors.
Continue to the full article --> here
[Breaking News]: Securities Regulators seek comment on proposed changes to OM exemption and two new proposed reports of exempt distribution
ASC Press Release | March 20, 2014
The Alberta Securities Commission (ASC), the Autorité des marchés financiers (AMF), the Financial and Consumer Affairs Authority of Saskatchewan (FCAA) and the Financial and Consumer Services Commission New Brunswick (FCNB) (Participating Jurisdictions) have published for comment proposed amendments to National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106) relating to the offering memorandum exemption (OM Exemption). The ASC, FCAA and FCNB have also published two new proposed reports of exempt distribution (Exempt Distribution Reports).
Staff of the Participating Jurisdictions have coordinated their efforts in developing the proposals with the Ontario Securities Commission (OSC). The OSC has concurrently published for comment, under a separate local notice, proposals relating to the OM Exemption and Exempt Distribution Reports.
“There has been serious effort by the jurisdictions involved to achieve significant alignment among these proposals,” said Bill Rice Chair of the CSA and Chair and Chief Executive Officer of the Alberta Securities Commission. “Differences in regulatory approach reflect differences in local experience and feedback. Our intent is to review the submitted comments and achieve as much harmonization as possible before the final rules come into force.”
We are interested in public comment on the relative merits of the different proposals as well as feedback on the extent to which harmonization in this area is of importance to stakeholders.
The proposed amendments to NI 45-106 and Exempt Distribution Reports have been posted to the Participating Jurisdictions websites. The comment period is open until June 18, 2014.
The CSA, the council of securities regulators of Canada’s provinces and territories, coordinates and harmonizes regulation for the Canadian capital markets.
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For more information:
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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 About Us | Prezi or contact us at casano@ncfacanada.org.
[Breaking News!]: Canadian Securities Regulators Propose New Crowdfunding Exemptions
AMF | CSA News Release | March 20, 2014
Thursday, March 20, 2014: Montréal – The Autorité des marchés financiers (AMF), the Financial and Consumer Affairs Authority of Saskatchewan (FCAA), Financial and Consumer Service Commission of New Brunswick (FCNB), the Manitoba Securities Commission (MSC) and the Nova Scotia Securities Commission (NSSC) today published for comment the Integrated Crowdfunding Prospectus Exemption (the Crowdfunding Exemption) and the Start-Up Crowdfunding Prospectus and Registration Exemption (the Start-Up Exemption). The proposed exemptions would, subject to certain conditions, allow both reporting and non-reporting issuers to raise money by distributing securities through internet portals.
The Ontario Securities Commission (OSC) is also publishing the Crowdfunding Exemption for comment today by way of a local notice and the British Columbia Securities Commission (BCSC) is also concurrently publishing a local notice soliciting comments on the Start-Up Exemption.
In a relatively short period of time, crowdfunding has become an important new method of raising capital through the internet for a broad range of purposes. To date, it has been used to raise money for a specific project and does not generally involve the issuance of securities. However, in some foreign jurisdictions, crowdfunding is emerging as a way for businesses to raise capital through the issuance of securities, particularly start-ups and small and medium enterprises (SMEs).
We think that crowdfunding can be a viable method for start-ups and SMEs to raise capital. However, because issuers do not all have the same capital needs nor the same resources to raise capital, we propose two different crowdfunding prospectus exemptions: the Crowdfunding Exemption available to reporting issuers and non-reporting issuers and the Start-Up Exemption aimed more particularly at providing an alternative source of capital to non-reporting issuers at a very early stage of development.
We believe that the Crowdfunding Exemption and the Start-Up Exemption are complementary: they focus on different stages in the growth and business cycles of start-ups and SMEs. At the same time, the proposed exemptions have requirements that are intended to maintain an appropriate level of investor protection and regulatory oversight.
The main differences between the proposed exemptions are that the Start-Up Exemption:
- Is available to non-reporting issuers only
- Does not require portal registration
- Allows for lower capital raising and investment limits
All participating CSA jurisdictions are inviting comments on or before June 18, 2014.
A copy of the CSA notice and proposed exemptions is available on participating CSA member websites and a copy of the OSC notice and of the BCSC notice are available on their respective websites.
The CSA also released today CSA Staff Notice 45-314 Consolidated List of Current CSA Exempt Market Initiatives. A copy of this notice is available on CSA member websites.
The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.
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Source: here
For more information:
| Sylvain Théberge Autorité des marchés financiers 514-940-2176 |
Wendy Connors-Beckett Financial and Consumer Services Commission New Brunswick 506-643-7745 |
| Tanya Wiltshire Nova Scotia Securities Commission 902-424-8586 |
Daniela Machuca Financial and Consumer Affairs Authority of Saskatchewan 306-798-4160 |
| Kevan Hannah Manitoba Securities Commission 204-945-1513 |
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 About Us | Prezi or contact us at casano@ncfacanada.org.
[Breaking News – It’s Here!]: OSC proposes four new capital raising prospectus exemptions
OSC News Release | March 20, 2014
Toronto - The Ontario Securities Commission (OSC) published today for a 90-day public comment period four new prospectus exemptions. These exemptions are intended to facilitate capital raising by businesses at different stages in their development, while maintaining an appropriate level of investor protection.
The exemptions are:
- an offering memorandum exemption that would allow businesses to raise capital based on a comprehensive disclosure document being made available to investors,
- a family, friends and business associates exemption that is intended to enable start-ups and early stage businesses to raise capital from investors within the personal networks of the principals of the business,
- an existing security holder exemption that would allow public companies listed on the Toronto Stock Exchange, TSX Venture Exchange or Canadian Stock Exchange to raise capital from their existing security holders based on their public disclosure record,
- a crowdfunding exemption that would allow businesses, particularly start-ups and early stage businesses, to raise capital from a potentially large number of investors through an online platform registered with the securities regulators.
The publication of these proposals follows a comprehensive review by the OSC of the exempt market. As part of that review, Staff considered the written comments received on earlier proposals. Staff also conducted extensive consultations with a broad range of stakeholders through a series of one-on-one meetings and town hall meetings, and an online survey designed to gauge the views of retail investors on investing in start-ups and small and medium-sized enterprises.
“Today we have proposed new tools, which will transform Ontario's exempt market by providing greater access to capital for businesses and expanding investment opportunities for investors,” said Howard Wetston, Q.C., Chair and CEO of the OSC. “We have done so in a balanced and responsible manner that is intended to facilitate capital raising while maintaining an appropriate level of investor protection. We look forward to receiving input on these proposals, which are tailored to address the needs of Ontario’s capital markets.”
The Notice and Request for Comment is available on the OSC website www.osc.gov.on.ca and the comment period runs until June 18, 2014.
In developing these proposals, OSC Staff have coordinated their efforts to achieve substantial harmonization with the current initiatives and existing exemptions of other members of the Canadian Securities Administrators.
For further information please see Backgrounder.
The OSC is the regulatory body responsible for overseeing Ontario’s capital markets. The OSC administers and enforces Ontario’s securities and commodity futures laws. Its mandate is to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets.
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Source: OSC News
| For Media Inquiries: media_inquiries@osc.gov.on.ca | Carolyn Shaw-Rimmington Manager, Public Affairs 416-593-2361Aly Vitunski Senior Media Relations Specialist 416-593-8263Alison Ford Media Relations Specialist 416-593-8307 |
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| For Investor Inquiries: | OSC Contact Centre 416-593-8314 1-877-785-1555 (Toll Free) |
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 About Us | Prezi or contact us at casano@ncfacanada.org.
