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Equity Crowdfunding: A Brave New Market?

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Calgary Herald | Brock Willis | March 18, 2014

Equity Crowdfunding will it work - Equity Crowdfunding: A Brave New Market?Everyone keeps talking about venture capital when they talk about crowdfunding, but is the real beast the exempt market?

With rule changes to the exempt market sector expected to be announced by the Ontario Securities Commission in the first quarter of 2014, the industry has its green hat on. The OSC is considering some capital raising prospectus exemptions including a crowd funding exemption, which aims to develop a crowd funding regulatory framework, focused on investing through online funding portals and a family, friends and business associates exemption.

In Canada, with the exception of Ontario, eligible investors can buy Exempt Market products via an Offering Memorandum (OM) Exemption. Canada also currently permits Equity Crowdfunding under the OM exemption in all jurisdictions except Ontario, provided that it is undertaken by registered dealers such as an Exempt Market Dealer (EMD). A sea change is pending. “It is novel, it is different,” says Brian Koscak, Chairman of the Exempt Market Dealers Association (EMDA) and partner with Cassels Brock & Blackwell law firm. “We are entering into a new world – social media meets securities law.” Koscak, who is actively involved in developing a viable crowdfunding framework for Canada is on record that the “OM exemption is the most important capital-raising exemption that Ontario needs to adopt.”  He strongly advocates that the proposed legislation can strike a balance between between protecting investors while not imposing excessive regulatory costs.


“This is the beginning of a dialogue,” Koscak says. “To me, this is an excellent move forward by the OSC in trying to promote capital raising and basically trying to bring together capital markets and technology.”

 In 2011, the estimated size of the exempt market in Canada alone was $150 billion (EMDA, March 2013).

 The Alberta Securities Commission has allowed “eligible” investors to participate in the exempt market for some time now, according to Nancy Bacon, an independent consultant in the Exempt Market industry with a primary focus on the Canadian market. However, considering the exempt market industry raised roughly $140 billion in 2011 and Ontario represented $86 billion (60%) of this total, the anticipated influx of investors from the eligible investor exemption in Ontario is significant,” says Bacon.

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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

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