The Canadian Securities Administrators (CSA) and provincial securities regulators have measures in place to regulate the equity crowdfunding landscape. The regulators exist to protect investors by ensuring equity crowdfunding offerings comply with the regulations of the jurisdiction in which the investor resides. One of the many ways these bodies help regulate equity crowdfunding is through the requirement that all offerings run through an online portal that is registered with the provincial regulators. This helps ensure the portals have the necessary credentials to issue such securities for private companies.
FrontFundr is one of these portals, and operates as an Exempt Market Dealer (EMD)—the highest of all portal standards. As a true professional financial services company, FrontFundr is subject to strict regulation and must adhere to Know Your Product (KYP) due diligence requirements on all companies offering securities. KYP requirements ensure that there is in depth knowledge of the company’s financial profile prior to engaging in trading, and that there is a clear understanding of the product. EMDs also require all investors to complete a Know Your Client form (KYC) in order to determine the investor’s financial situation, investment objectives and time horizon to determine whether an investment made via the platform is suitable for the investor.
As an EMD, FrontFundr performs stringent due diligence based on our internal assessment criteria and in accordance with securities regulation on all companies before listing them as investment opportunities. To gain a full picture of each company’s investment potential, there is a minimum of three team members that perform a thorough analysis on the financial statements and all critical documentation. Once due diligence is complete, companies are subject to screening via our five-person Investment Review Committee (two of which are independent third parties) to ensure thorough understanding of the business and its investment potential.
In addition to being an EMD, FrontFundr is a member of the National Crowdfunding Association of Canada (NCFA), the Private Capital Markets Association of Canada (PCMA), the Vancouver Board of Trade (VBoT), and the BC Technology Industry Association (BCTIA). Membership in these organizations allows us to stay on top of industry news, connect with the governing bodies who advocate for regulatory change, meet other businesses with similar goals, stay abreast of industry best practice, and remain engaged with regulators and other businesses who influence crowdfunding and businesses practice in Canada.
FrontFundr is committed to stringent due diligence practices to ensure investors are presented with only highly-vetted companies, and that entrepreneurs are ready and able to move into the next stage of raising capital for their business. With designated financial professionals in our firm and our EMD regulatory adherence, our practice is credible and executed without compromise on due diligence. For more information on the securities regulation that governs our practice, visit our Investor Concierge.
This article is for general information only. It is not intended to provide specific customized advice including, without limitation, investment, financial, legal, accounting or tax advice. A decision by FrontFundr to list an investment opportunity on its platform should not be interpreted as an opinion with regards to future return on investment. The contents of this article are given in summary form and do not purport to be complete. FrontFundr recommends companies and investors to obtain professional legal advice before any capital raise or investments are considered. For further information regarding private placements in BC, please visit the BC Securities Commission website.