Focus on Securities - Will Canada Make Room for Crowdfunding?


In This Issue:

- 1. Will Canada Make Room for Crowdfunding?

- 2. Contact Us

Excerpt From “Will Canada Make Room for Crowdfunding?”

When the U.S. recently changed its securities laws to enable equity crowdfunding, advocates of the practice to the North started urging Canadian securities administrators to follow suit. What reforms are needed to enable equity crowdfunding in Canada? Taking a closer look at how crowdfunding fits (or more to the point, does not fit) with current Canadian securities law and comparing the experience of other countries should help answer this question. The Crowdfunding Concept

Crowdfunding and crowdsourcing cover a range of activities – from charities soliciting donations on the Internet to “donation and reward” portals like the U.S.-based Kickstarter. On sites like Kickstarter, entrepreneurs can give rewards, such as pre-release products, to financial backers.1 Kickstarter and its U.K. equivalent, CrowdFunder, are examples of how to successfully leverage “the crowd” to raise funds.

Equity crowdfunding takes things one step further. Like traditional ways of raising capital, equity crowdfunding involves giving investors shares or other securities in exchange for financing. The difference is that equity crowdfunding uses online platforms and the full reach of the Internet to source investors and automate transactions. Crowdfunding “portals” can even be seen as micro stock exchanges. This expansive reach is the real attraction of equity crowdfunding for fledgling enterprises,

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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