The Private Capital Markets Get ‘Crowded’ in Canada – Recent Developments in Equity Crowdfunding


Equity crowdfunding

On March 20, 2014, the Canadian Securities Administrators created significant buzz by proposing rules which would allow investors in large parts of the country to participate in equity crowdfunding.

This is a specific equity crowdfunding framework that builds on the model proposed and published by the Ontario Securities Commission in December 2012, but now has five other jurisdictions joining Ontario in considering this proposed capital raising initiative.

This exemption was modelled upon an existing Saskatchewan General Order 45-925 Saskatchewan Equity Crowdfunding Exemption that became effective December 6, 2013. The Start-Up Crowdfunding Exemption is being considered by the Participating Jurisdictions except Ontario.

  • While the British Columbia Securities Commission (the BCSC) did not participate in the publication of the Start-Up Crowdfunding Exemption, it did publish BCSC Notice 2014/33, which requested comment on whether it should adopt a similar exemption in British Columbia.

The BCSC its view that a form of equity crowdfunding is already permitted in British Columbia with the use of the offering memorandum exemption in Section 2.9 of National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106).

New Tools for an Old Concept

While the popularity of equity crowdfunding is relatively new, the discussion surrounding the sale of securities over the internet is not. In 1999, the CSA adopted National Policy 47-201 Trading in Securities Using the Internet and Other Electronic Means, which set out the views of securities regulators regarding the use of the internet. As that policy makes clear, even in the absence of Proposed MI 45-108 and the Start-up Crowdfunding Exemption, trades can done today over the internet in reliance on existing exemptions, such as the accredited investor exemption in section 2.3 of NI 45-106. However, there can be no denying that such an approach can prove cumbersome, and the proposed tailor-made exemptions are therefore worthy of careful consideration.

Each of Proposed MI 45-108, the Start-up Crowdfunding Exemption and BC Notice 2014/33 are open for comment until June 18, 2014.

Future Blog Posts

Future blog posts will examine this new eco-system of capital raising and provide insight and commentary so keep reading.

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This blog is not intended to create, and does not create an attorney-client relationship. You should not act or rely on information on this blog post without first seeking the advice of a lawyer.  This material is intended for general information purposes only and does not constitute legal advice.  For legal issues that arise, the reader should consult legal counsel.

Koscak_bBrian Koscak is a Partner at Cassels Brock & Blackwell LLP located in Toronto, Ontario and Chair of the Private Capital Markets Association of Canada (formerly the  Exempt Market Dealers Association of Canada). Brian is also a member of the Ontario Securities Commission’s Exempt Market Advisory Committee and Co-Chair of the Equity Crowdfunding Alliance of Canada.  Brian can be reached by phone at 416-860-2955, by e-mail at or on twitter @briankoscak. Brian also regularly writes about Canadian securities law matters on his personal blog at

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