The recent arrival of the KickStarter platform in Canada serves as a reminder that some interesting developments in the regulation of “crowdfunding” have been occurring in the last several months. This article focuses on the exemption granted to MaRS VX by the Ontario Securities Commission, which recently authorized the very first capital crowdfunding platform in Canada. Crowdfunding is a way of financing a project or business by pooling small financial contributions obtained through Web platforms (such as La Ruche in the Quebec City region) and making use of social media for advertising and solicitation. A person seeking financing can present the project to the “crowd” using the Web platform and request small contributions from a large number of individuals, thereby raising a sizable sum. In Canada, some platforms already offer the opportunity to entrepreneurs to obtain financing through crowdfunding in the form of donations or in exchange for rewards, but in the absence of an exemption from the obligation to file a prospectus, the offering of equity is prohibited. Nevertheless, over the course of the last few months, securities commissions across the country have shown some degree of open-mindedness, hinting at the possibility that exemptions from the obligation to file a prospectus may […]
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