Overview 

On June 23, 2021, the Canadian Securities Administrators (CSA) adopted harmonized rules for securities crowdfunding. The new National Instrument 45-110, Start-up Crowdfunding Registration and Prospectus Exemptions, introduces a single, uniform set of rules that replaces and enhances the requirements currently in effect in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Québec and Saskatchewan.

Following stakeholder consultation, the CSA made targeted amendments to improve the effectiveness of start-up crowdfunding as a capital-raising tool, including:

• Increasing the maximum total amount that an issuer can raise under the crowdfunding prospectus exemption in a 12-month period to $1.5 million (from the current $500,000).
• Increasing the maximum investment a purchaser can make in an offering to $2,500 (from the current $1,500), with a higher limit of $10,000 if a registered dealer advises that the investment is suitable for the purchaser.
• Removing barriers preventing federal and provincial co-operatives or associations from using the start-up crowdfunding prospectus exemption.
• Requiring funding portals relying on the registration exemption to certify on a semi-annual basis that they have sufficient financial resources to continue operations for the following six months.
• Requiring issuers to have operations other than the acquisition of an unspecified business before using the start-up crowdfunding prospectus exemption.

Provided all necessary ministerial approvals are obtained, the Start-up Crowdfunding Rule (and the consequential amendments to NI 13-101 and NI 45-102) will come into force on September 21, 2021.

Recent developments

Amendments under consideration

• None