Shortly after, British Columbia, that voluntarily stayed out of the group of Canadian provinces which was drafting a regulation for securities crowdfunding, asked its citizens whether it should backtrack and consider a specific regulation as well. The change of decision has been taken as a consequence of growing pressures by SMEs and start-ups, for which the current regime requires expensive compliance considerations.
However, according to local start-ups and SMEs the current regime is too expensive, thus inhibiting them from turning to crowdfunding. Therefore the British Columbia Securities Commission (BCSC) has launched a public comment period to understand whether adopting the startup crowdfunding exemption would it would it make less burdensome for small companies for small companies and start-ups to use equity crowdfunding as source of finance.
In particular, as reported by BCSC, the startup crowdfunding exemption proposes the following points:
- The issuer can raise no more than C$150,000 and it can offer no more than twice per year
- Investors can invest a maximum of C$1,500 per offering
- The issuer is not a reporting issuer or an investment fund
- The offering must go through an on-line funding portal
- The issuer provides a streamlined offering document to investors through the portal
- Portals can operate without being registered under securities legislations, provided the following conditions:
- the portal is prohibited from providing investment advice
- the portal must ensure investors confirm online that they have read and understood the issuer’s offering document and the risk warnings required under the exemption
- the portal must ensure that all funds are held in trust for investors until the issuer raises the minimum amount required to close the offering
- the portal must provide advance notice of its intention to use the exemption
Those interested in providing a comment to the BCSC can send comments about this proposal in writing on or before June 18, 2014 to the following address:
British Columbia Securities Commission
P.O. Box 10142, Pacific Centre
701 West Georgia Street
British Columbia Securities Commission (2014). Notice and Request for Comment on Start-Up Crowdfunding.
Image credit: Alejandro Mejia Greene. http://bit.ly/1mqiV05
During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.