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Saskatchewan Proposes New Equity Crowdfunding Exemption for Start-Ups – Portals Exempt from Registration – Regulation-Lite!


Cassels Brock & Blackwell LLP | Posted By Brian Koscak on Jul 9, 2013

Cassels Brock

The Saskatchewan Financial and Consumer Affairs Authority (∫FCCA) released a concept proposal on July 9, 2013 to legalize equity crowdfunding for start-ups with a two year sunset clause.

Investors Protection- Under the concept proposal, investors are limited to investing no more than $1,000 per deal but there is no  limit on how many investments an investor can make during any 12-month period.

Regulation of Issuers - Issuers can raise up to $100,000 no more than twice per year and each offering period can be no longer than six months.  There are no financial statement requirements.  Any type of issuer can use this exemption and issue any type of security. Issuers must prepare an information document that sets out the basics of the offering, and an investor risk warning must be filed with the FCCA. The Information document must be pre-filed with the FCCA ten days before the offering commences, and unless the FCCA identifies any concerns, the offering will proceed automatically. The information document will not trigger statutory rights of action for misrepresentation; however, common law rights will still apply. Promoters, directors and officers will be required to sign and consent to a Canadian Police Information Centre (CPIC) check.

Regulation of Portals - Portals are exempt from registering with the FCCA, therefore, there are no “know your client” or “suitability” requirements. Portals cannot provide investment advice.  Portals can charge fees but no fees are required to be paid to the FCCA.

The proposal is for Saskatchewan only, unless adopted by other jurisdictions in Canada. The FCAA plans to continue consultations through the summer and if the proposal is well-received, it will look to finalize the exemption in the fall.

Download Saskatchewan's FCAA Equity Crowdfunding Prospectus Exemption (proposal)