Financial Post | Barbara Shecter | Feb 19, 2015

Canadian regulators hope to have a crowdfunding regime in place by the summer.

In a notice Thursday, the Ontario Securities Commission said regulators in several jurisdictions are in the midst of reviewing comment letters received in response to crowdfunding rules proposed last year.

The next step is either final rules or a second comment period, if required.

The crowdfunding regime proposed last year would allow startups and small-to-medium-sized businesses to raise capital from a potentially large number of investors though an online portal registered with securities regulatory authorities. Businesses could raise up to $1.5-million during a 12-month period.

Investors would be limited to $2,500 for a single investment, and $10,000 in total for each calendar year.

Regulators in Manitoba, New Brunswick, Nova Scotia, Quebec, and Saskatchewan also sought comment on the proposed crowdfunding regime.

OSC to Speak at 2015 Canadian Crowdfunding Summit on March 3 at MaRS Discover, Toronto

The Ontario Securities Commission said Thursday it will introduce a previously proposed new exemption governing investments in the exempt market to bring the province in line with other jurisdictions. The “friends and family” exemption will allow businesses to raise capital from investors who are either principals of the business or “within the personal networks” of the principals of the business.

Neil Gross, executive director of the Foundation for the Advancement of Investor Rights (FAIR Canada), said the new exemption will be “difficult to police.”

The investor advocacy group has long opposed the friends and family exemption in other provinces where Mr. Gross said it “is widely abused.” Despite safeguards adopted by the OSC, such as prohibiting advertising and finders’ fees or commissions, he said he doesn’t think it will be sufficient to protect investors, particularly given the “practical difficulties” of ensuring compliance.

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