Senior Legal Counsel, Corporate Finance, BCSC, Elliot Mak, along with Graham Stanley, General Manager, Community Futures Stuart Nechako discuss crowdfunding regulations BC from a regulator's perspective and a practical portal operators perspective.
2. • Part 1 : Overview of securities regulations
• Part 2 : Using the start-up crowdfunding
exemptions
• Part 3 : Regulations in other jurisdictions
Agenda
11. The Instrument
• BC Instrument 45-535 Start-up Crowdfunding
Registration and Prospectus Exemptions
• Form 1 - Offering Document
• Form 2 - Risk Acknowledgement
• Form 3 - Funding Portal Information Form
• Form 4 - Funding Portal Individual Information
Form
13. Start-up Crowdfunding
• Up to $250,000, two times per year
• Investor limit of $1,500
• Through registered portal or portal using
registration exemption
14. Who Can Participate?
• Not available to reporting issuer or
investment fund
• Located in participating jurisdiction
• No common principals with portal
15. Offering Document
• Details: idea, business and distribution
• No financial statement requirements
• Must be true
16. Raising the Minimum Amount
• 90 days to raise minimum amount
• Funds held in trust until closing
• Concurrent distributions
17. How to Invest
• Electronically through portal
• Acknowledge risk warning
• Right of withdrawal
20. Using the Prospectus Exemption
• Read published guidance including offering
document instructions
• File exempt distribution report
21. Registration Exemption
• Issuers must use a funding portal
• Who can operate funding portals?
Registered in an appropriate category
Exempt – if they meet all conditions
22. Registration Exemption
• Key conditions of the registration exemption:
Deliver prescribed filings
No investment advice
Holds investors’ assets in trust
23. Registration Exemption
• Other key conditions:
Not registered under securities legislation
Head office located in Canada
Exempt portal acknowledgement
24. Registered Firms
• Registered firms must:
Confirm they meet certain conditions
Registered in an appropriate category
File a Form 33-109F5 Change of Registration
Information
25. Setting Up a Funding Portal
• Read funding portal guide
• Make test environment available
28. MI 45-108
• $1,500,000 raised by issuer group within
12-month period
• Investment limit of $2,500 (many exceptions)
• Financial statements
Point-of-sale
ongoing
29. MI 45-108 Funding Portals
• Must be restricted dealer, investment dealer
or EMD
• Restricted dealer exempt from KYC and
suitability
• Limited due diligence required on issuer
30. BCI 72-505
• BC company can use MI 45-108 to access
investor outside BC
• All conditions of MI 45-108 must be met
31. Start-Up Business Prospectus (AB)
• Prospectus exemption only – no portal
required
• $1,000,000 maximum aggregate raise
(lifetime) for issuer group
• Tiered investment limits
32. Crowdfunding Availability
Exemption Available Jurisdictions
MI 45 – 108 only ON
Start-up crowdfunding only BC
AB start-up business only AB
MI 45-108 and start-up crowdfunding SK, MN, QC, NB, NS
No “crowdfunding” exemption NL, PE, YK, NT, NU
33. SEC Crowdfunding
• $1 million in a 12-month period with tiered
investment limits
• Financial statements
Point-of-sale
Ongoing
• “Intermediary” must be registered as a
broker dealer or “Funding portal”