Recent Regulatory Developments in Equity Crowdfunding in Canada

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Equity-Crowdfunding-CanadaCanada now has two crowdfunding specific exemptions: the Start-Up Crowdfunding Exemption (May 14, 2015 – BC, SK, MB, QU, NB, and NS), and the Integrated Crowdfunding Exemption (Jan. 25, 2016 -MB, ON, QU, NB, and NS, with SK pending).

As of today’s date, there are six portals operating in Canada which list Start-up Crowdfunding Exemption deals.

There are no portals which are authorized to list deals under the Integrated Crowdfunding Exemption, but this is not a surprise as the rule only came into force on Jan. 25, 2016.

Entrepreneurs can also use the accredited investor exemption and the offering memorandum exemption to raise capital on online funding platforms (available in every jurisdiction across Canada). There are eight online funding platforms offering deals relying on these two exemptions and more on the way.

The offering memorandum exemption is new to Ontario (Jan. 13, 2016) and their version has some significant changes to the two versions in force elsewhere in Canada.

Come April 30, 2015, Alberta, New Brunswick, Nova Scotia, Quebec, and Saskatchewan will amend their versions of the offering memorandum exemption to conform with the Ontario version.

Alberta also has introduced for comment a proposed Prospectus Exemption for Start-up Businesses. This exemption has a number of things in common with the Start-up Crowdfunding Exemption adopted in other provinces, but there are some major differences as well.

On February 2, 2016, I taped my phone to the wall and spoke to a group of lawyers in Saskatchewan via Skype about these recent regulatory developments in equity crowdfunding.  Skype and my web camera on my computer apparently are not compatible with the latest Windows 10 upgrade. Something that was discovered five minutes to the presentation time.  The last minute solution was to see if the organizer could hear me at an acceptable volume level using the Skype app on my cell phone. I was given the thumbs up, and the attendees followed along from paper print-outs they were given of the slides. From my end of the Skype connection, I was talking to a very long empty table top.  These are the slides from that presentation.

Alixe Cormick is the founder of Venture Law Corporation in Vancouver, British Columbia and a member of Commercialization Advisory Board of the Life Science Institute at the University of British Columbia, the Advisory Board of the National Crowdfunding Association and two private tech companies. She is also a member of the Pacific Northwest Keiretsu Forum, an association of accredited private equity angel investors, venture capitalists and corporate/institutional investors, and Vantech Angel Technology Network, a Vancouver angel group. You can reach Alixe by phone at 604-659-9188, by email at acormick@venturelawcorp.com, on twitter @AlixeCormick or on Google+.

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