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CSA – Proposed Harmonized Rules for Securities Crowdfunding of Start-ups (Proposed National Instrument 45-110) [ED]

Comments period ended July 11, 2020

Proposed effective date:

To be determined

Last up­dated:

July 2020

Overview

On February 27, 2020, the Canadian Securities Administrators (CSA) issued for comment Proposed National Instrument 45-110, Start-up Crowdfunding Registration and Prospectus Exemptions, which would replace and enhance the substantially harmonized requirements currently in effect in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia.

The proposals represent harmonized rules for start-up securities crowdfunding that would become effective in each of these Provinces.

Enhancements from the current requirements include: 

  • Increasing to $1 million (from $500,000) the maximum total amount that could be raised by a business under the crowdfunding prospectus exemption per year;
  • Increasing to $2,500 (from $1,500) the maximum investment a purchaser can make in an offering, with a higher limit of $5,000 if the purchaser obtains advice from a registered dealer that the investment is suitable for the purchaser;
  • Requiring funding portals to annually certify that they have sufficient working capital to continue operations for the following year.

For further details refer to the press release on the CSA's website and the proposed National Instrument on the OSC's website.

 

Other developments

July 2020

On July 30, 2020, the CSA announced that in light of COVID-19 and the challenges it presents to small businesses seeking to raise capital, the Ontario Securities Commission (OSC) made an interim local order that adopts the start-up crowdfunding regime currently in place in certain other Canadian jurisdictions (the Interim Order).

March 2020

On March 18, 2020, the CSA announced that all CSA proposals currently out for comment will have their comment periods extended by 45 days.

February 2020

On February 27, 2020, the Canadian Securities Administrators (CSA) issued for comment Proposed National Instrument 45-110, Start-up Crowdfunding Registration and Prospectus Exemptions, which would replace and enhance the various requirements currently in effect in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia. Comments are requested by May 27, 2020.

 

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