Less than a week after the U.S. Securities and Exchange Commission voted to implement Title III of the JOBS Act (expanding crowdfunding for non-accredited U.S. investors), the securities regulatory authorities in five Canadian provinces introduced two new proposed crowdfunding exemptions in Multilateral Instrument 45-108 Crowdfunding. The exemptions will allow start-ups in Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia to raise capital from a wide investor pool, including non-accredited investors, through online funding portals such as FrontFundr.
The new changes are anticipated to take effect January 25, 2016, and will provide start-ups with easier access to capital. The changes will also open the doors to non-accredited investors and allow people to access new investment opportunities that were previously unavailable to those not in the ‘1%’. Expanding regulations like these give start-ups the opportunity to obtain investment from true brand champions, and not just those who are professional or seasoned investors.
Along with these changes that open up the investor base for start-ups, the proposed regulations will have measures in place to mitigate risk for investors. Start-ups will be required to utilize registered funding portals, such as FrontFundr, in order to distribute their securities. As explained in the official Ontario Securities Commission press release, “These funding portals will fulfill certain gatekeeper functions that include reviewing the issuer’s disclosure and obtaining background checks on the issuer and its directors, executive officers and promoters.”
At FrontFundr, we’re excited to see regular and continued forward movement toward a democratized capital market. These new proposed regulations support entrepreneurs in their growth, and also give regular citizens much broader investment opportunities. FrontFundr is committed to providing transparency and high levels of disclosure to inform participants of the risks and rewards of making such investments. With stringent measures in place, we view the proposed regulations as positive changes for both investors and start-ups.
To learn more about the rules in each province and to help you navigate and understand the complex legislation and what it means to you, visit our Investor Concierge.