B.C. Securities Commission publishes new securities crowdfunding exemption for comment.
Members of the Canadian Securities Administrators published a proposed crowdfunding exemption modelled on the Saskatchewan Equity Crowdfunding exemption adopted on December 6, 2013 (the start-up crowdfunding exemption). The British Columbia Securities Commission is requesting comment on whether a similar exemption should be adopted in B.C.
The start-up crowdfunding exemption would enable securities crowdfunding by early-stage businesses and start-ups. An issuer could distribute securities without a prospectus, provided:
- the issuer raises no more than $150,000 per offering and offers no more than twice per year
- no investor invests more than $1,500 per offering
- the offering is made on an on-line funding portal
- the issuer provides a streamlined offering document to investors through the portal
“We feel that this crowdfunding model could address a gap in the financing needs of start-up and early stage companies in B.C.,” said Brenda Leong, Chair of the BCSC. “We think it could fit well within the existing exempt market regime available to small businesses.”
The start-up crowdfunding exemption would allow a crowdfunding portal to operate without being registered under securities legislation, provided the portal:
- does not provide investment advice
- ensures investors confirm online that they have read and understood the issuer’s offering document and the risk warnings required under the exemption
- ensures that all funds are held in trust for investors until the issuer raises the minimum amount required to close the offering
Other members of the Canadian Securities Administrators, including the Autorité des marchés financiers (AMF), the Financial and Consumer Affairs Authority of Saskatchewan (FCAA), Financial and Consumer Service Commission of New Brunswick (FCNB), the Manitoba Securities Commission (MSC) and the Nova Scotia Securities Commission (NSSC), today published for comment the start-up crowdfunding exemption, as well as a crowdfunding prospectus exemption developed by the Ontario Securities Commission. The BCSC is not publishing the Ontario crowdfunding proposal at this time, but will monitor crowdfunding developments across the CSA.
The BCSC invites comments until June 18, 2014.
