In response to the crowdfunding regulations proposed by regulators in Quebec, Saskatchewan, New Brunswick, Manitoba and Nova Scotia in March 2014, the B.C. Securities Commission requested comment on whether a similar exemption should be adopted in B.C. The commenting period for these proposed regulations closes on June 18, 2014, which is quickly approaching. Given the importance of these proposed crowdfunding regulations to the start-up community, we encourage anyone who would like to submit a formal comment to the B.C. Securities Commission before the deadline to do so. Comments can be submitted in writing to:
P.O. Box 10142
701 West Georgia Street
Vancouver, BC V7Y 1L2
The proposed regulations would create a new exemption under which early stage and start-up companies could issue securities to the public without requiring a prospectus or triggering onerous disclosure and reporting obligations. Under these regulations, early stage and start-up companies seeking to use equity crowdfunding to raise capital would be exempt, provided that:
- each investor is limited to a $1,500 investment per offering;
- the offering is made in an online funding portal;
- a streamlined offering document through the portal is provided; and
- no more than $150,000 is raised per offering (with an offering limit of twice per year).
With respect to crowdfunding portals, the proposed regulations would allow portals to operate without being registered, so long as:
- no investment advice is provided;
- investors confirm that they have read and understand the issuer’s offering documents and the required risk warnings; and
- all funds are held in trust for investors until the issuer raises the required amount to close the offering.