Start-up crowdfunding exemption

A founder who wants many small investors rather than a few large ones may look at this regime. The Alberta Securities Commission describes it as an option that may cost less than a prospectus or the offering memorandum exemption, with an offering document that need not contain financial statements. See equity partner vs debt financing.

How it works

• The distribution goes through a funding portal that relies on the registration exemption in NI 45-110 or is operated by an exempt market dealer or investment dealer.
• The issuer completes an offering document on Form 45-110F1 and provides it to the funding portal, and each investor completes the Form 45-110F2 risk acknowledgement and confirms reading the offering document.
• The commission says the issuer can sell only “simple” securities and must have its head office in Canada.
• NI 45-110 sets limits on what an issuer can raise and an investor can put in; read the instrument for the current ones.

Filing, resale and provinces

The Alberta commission says the issuer files a report of exempt distribution with it, and with each other jurisdiction where the distribution occurred, within 30 days. It says resale restrictions continue indefinitely unless the issuer becomes a reporting issuer. The Canadian Securities Administrators describe the regime as a harmonized national framework. This entry draws on Alberta’s regulator and that notice; check the rules where you are.