On March 20, 2014, the Ontario Securities Commission (OSC), along with other jurisdictions, published proposals for new prospectus exemptions. These exemptions are the regulator’s response to developing new ways for small- and medium-size enterprises (SMEs) to raise capital without the time and expense spent creating a prospectus.

One of the OSC’s exemption proposals involves equity crowdfunding. For an overview of the two equity crowdfunding models that are currently being proposed, see my previous blog post.

One purpose of publishing the proposals is to invite those who are interested to review them and provide feedback. As a result, in anticipation of submitting comments to the OSC on the equity crowdfunding prospectus exemption, MaRS consulted with entrepreneurs, investors, potential portals, security lawyers, industry organizations such as the Equity Crowdfunding Alliance of Canada and the National Crowdfunding Association of Canada, SVX and regulators across the country. Subsequently, we consolidated all of the feedback and submitted our response to the OSC on June 18.

We thank all of our collaborators for their valued input! To view MaRS’ full submission, click here

MaRS recognizes that equity crowdfunding is in its infancy; however, we believe that the crowdfunding prospectus exemption presents an opportunity to create a useful tool for SMEs to raise capital by potentially offering a low-cost way of reaching a larger investor base. Most crowdfunding discussions focus on raising capital, but we also believe the equity crowdfunding environment can help stimulate and accelerate innovation by exposing more Canadians to local entrepreneurs and inspiring them to mobilize their support for great Canadian ideas. As a result, the MaRS submission incorporated the following three recurring themes.

  1. Ensuring issuers have access to the largest pool of qualified investors
  2. Establishing consistent and harmonized rules across Canada, wherever possible
  3. Minimizing the compliance costs to issuers and portals.

All comments received during the comment period will be made publicly available and posted on the OSC website. The OSC is hoping to make a final decision and publish the new rules by the fall.

Carlos Pinto Lobo

Carlos is the Chief Compliance Officer of the SVX, the first North American registered dealer that connects small and medium private issuers who have a demonstrable social and/or environmental impact with accredited investors. See more…