On March 20, 2014, the Ontario Securities Commission (OSC) and
the securities regulators in six other provinces published for
comment proposed prospectus exemptions for issuers seeking to use
crowdfunding to raise capital.
Under the proposed exemptions, qualifying issuers would be
allowed to use crowdfunding to issue securities without having to
prepare a prospectus. The exemptions would significantly reduce the
cost of raising capital while providing a regulatory framework for
investors who participate in the increasingly popular
equity-raising vehicle.
Background
While established methods of raising capital have typically
focused on raising relatively large amounts of money from a smaller
pool of traditional investors, crowdfunding instead relies on
raising relatively small amounts of money from a larger pool of
people, many of whom may not be traditional investors. Crowdfunding
predominantly takes place through the Internet and can often
involve investors
