The Alberta Securities Commission (ASC) and the Financial and Consumer Affairs Authority of Saskatchewan (FCAA) are looking to boost access to capital for smaller firms by creating new rules to allow issuers to raise up to $5 million in a more streamlined offering.
According to the Canadian Securities Administrators (CSA), the two provinces are seeking input on improving the funding environment for SMEs will expanding access to a wider group of investors.
Stan Magidson, Chair and CEO of the ASC, explained:
“Small businesses in our provinces continue to face challenging economic conditions so it’s important that we pursue new approaches to facilitate their ability to access capital while still protecting investors.”
Roger Sobotkiewicz, Chair and CEO of the FCAA, added:
“We are hopeful that this proposal will help address the financing challenges of small local businesses that do not currently have the profile or growth prospects to attract the interest of venture capitalists or public capital markets.”
The proposed new small business financing prospectus exemption is expected to allow Alberta and Saskatchewan businesses to raise up to $5 million from investors in those provinces who wouldn’t qualify to invest under other prospectus exemptions. The hope is to provide a simple, streamlined offering document with tiered offering and investment limits depending on whether financial statements are provided to investors.
As most people know, smaller firms are key to driving new jobs, economic growth as well as prosperity. Access to capital is typically the number one issue facing smaller firms seeking to launch or simply grow.