At the recent Technicity conference in Toronto, Brad Duguid, Ontario’s Minister of Economic Development and Innovation, expressed support for introducing equity crowdfunding in Ontario. Recognizing the need to keep innovators on the north side of the border, Minister Duguid explained that “it’s really important that Ontario keep pace if not even try to get out in front [of the US] if we can do that in a way that ensures protection for consumers and investors.”
Canadian proponents of crowdfunding have encouraged our regulators to adopt crowdfunding measures introduced in the U.S. in the Jumpstart Our Business Startups Act (the JOBS Act). The JOBS Act was ratified in April 2012. After some delay, the crowdfunding provisions of the JOBS Act are currently expected to come into force some time in mid-2013.
Equity crowdfunding allows early stage companies to issue securities to investors in return for an equity stake. The U.S. legislation creates a regulatory scheme for online funding portals and will enable fundraising from any investor, regardless of accreditation. Click here for a more complete review of the JOBS Act and crowdfunding in Canada.
Canadian start-ups should be aware that the new U.S. crowdfunding exemption for non-accredited investors is available only to issuers incorporated in the US. Mr. Duguid stated that the Ontario regulator is “aware that the Premier and government wants to ensure that should we recommend that we move forward with this tool, that we do it as soon as possible to ensure that we are not disadvantaged if the U.S. are to move ahead of us.”