ASC and Nunavut Securities Office Publish Proposed Start-up Business Exemption for Comment
The Alberta Securities Commission (ASC) and the Nunavut Securities Office today published for comment Proposed Multilateral Instrument 45-109 Prospectus Exemption for Start-up Businesses, which sets out a proposed prospectus exemption to facilitate capital raising by start-up and early stage companies. Subject to certain conditions, the proposed exemption would allow a start-up or early stage business to raise up to $1,000,000 using a streamlined offering document together with a bluntly worded risk warning. Investors would be permitted to invest up to $1,500 in a business or $5,000 with the advice of a registered dealer.
Although not limited to crowdfunding, the proposed exemption could be used to raise funds through an online portal. If implemented, the new rule would only create a new prospectus exemption; if a financing occurs through a portal, the portal would still need to comply with the registration requirement — e.g., be registered as an exempt market dealer or investment dealer.
The proposed exemption is designed to coordinate with the crowdfunding blanket orders adopted by the securities regulators of British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia.
The comment period expires December 18, 2015.