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45-108, Crowdfunding

Effective date:

January 25, 2016, except for subsequent amendments.

Published by the CSA:

November 5, 2015

Overview 

On November 5, 2015, the securities regulatory authorities in Manitoba, Ontario, Québec, New Brunswick and Nova Scotia (collectively, the participating jurisdictions) published in final form Multilateral Instrument 45-108, Crowdfunding, which introduces a crowdfunding prospectus exemption for issuers as well as a registration framework for funding portals. The MI 45-108 crowdfunding regime will enable businesses to benefit from greater access to capital from a large number of investors online.

Among the measures adopted to protect investors, issuers will be required to distribute their securities through a registered funding portal. These funding portals will fulfill certain gatekeeper functions that include reviewing the issuer’s disclosure and obtaining background checks on the issuer and its directors, executive officers and promoters. In addition, investment limits based on the investor’s income and financial resources have been adopted as a means of reducing their exposure to a risky investment.

Provided all necessary Ministerial approvals are obtained, MI 45-108 will come into force in the participating jurisdictions on January 25, 2016.

The crowdfunding regime set out in MI 45-108 is in addition to the Start-up Crowdfunding exemption approved by local order on May 14, 2015 by the securities regulators of British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia, which does not require issuers to distribute their securities through a registered funding portal and which has lower funding limits. The MI 45-108 crowdfunding regime will coexist and is viewed to be complementary with the Start-up Crowdfunding exemption by those jurisdictions that adopted it on May 14, 2015.

On October 31, 2016, the Alberta Securities Commission (ASC) announced that it has also adopted Multilateral Instrument 45-108. The new rule is available immediately. The implementation of MI 45-108 by the ASC follows its adoption on July 26, 2016 of ASC Rule 45-517 Prospectus Exemption for Start-up Businesses, which was introduced to help facilitate Alberta-based small or start-up issuers seeking to raise modest amounts of capital from Alberta investors.

Recent developments

Date

Development

Comments

March 20, 2014

Re­lease OSC proposes four new capital raising prospectus exemptions, including a Crowdfunding Prospectus Exemption

On March 20, 2014, the OSC published for comment a proposal for a crowdfunding exemption that would allow businesses, particularly start-ups and early stage businesses, to raise capital from a potentially large number of investors through an online platform registered with the securities regulators.  See Project.

March 20, 2014

Re­lease Certain Provinces publish for comment the Integrated Crowdfunding Prospectus Exemption

Quebec, Saskatchewan, New Brunswick, Manitoba and Nova Scotia (the “participating jurisdictions”) published for comment the Integrated Crowdfunding Prospectus Exemption.  See Project

May 14, 2015

Release Multilateral CSA Notice 45-316, Start-up Crowdfunding

Registration and Prospectus Exemptions

The participating regulators have implemented, or expect to implement, the start-up crowdfunding exemptions by way of local blanket orders.

November 5, 2015

Re­lease Regulators Publish Crowdfunding Exemption and Registration Framework for Funding Portals

Manitoba, Ontario, Québec, New Brunswick and Nova Scotia (collectively, the participating jurisdictions) publish in final form Multilateral Instrument 45-108 "Crowdfunding" See News item.

October 31, 2016

Release ASC adopts Crowdfunding rule

On October 31, 2016, the ASC announced that it has also adopted Multilateral Instrument 45-108 effective immediately. See Project.

Note: The above summary of Recent Developments does not include consequential amendments made as the result of other projects.

For further details on the history of this Instrument, please refer to the OSC’s website.

Amendments under consideration

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