Torys’ Securities Lawyers Comment on New Exemptions for Smaller Businesses in Advisor.ca

January 27, 2016

Two pieces of securities regulation recently finalized in Canada have altered the reporting requirements for small businesses seeking to access capital. The “Crowdfunding Exemption” adopted by several provinces in November 2015, and the “Offering Memorandum Exemption” recently adopted by Ontario, provide specific reporting exemptions for smaller-scale businesses and securities issuers. An overview of these developments by Advisor.ca features comments from members of Torys’ Capital Markets Practice Glen Johnson, Eric Foster, and Matthew Atkey. Below is an excerpt of the article.

Eric Foster, senior associate at Torys in Toronto, says the [crowdfunding] exemption is “reactionary, but that in and of itself is not a bad thing.” He appreciates regulators acknowledging the important role the internet and social media play in capital raising—especially for start-ups and smaller companies.

But investor limits could cause headaches. Matthew Atkey, also a senior associate at Torys, says, “For a company to hit its yearly maximum of $1.5 million, it’d have to bring in 600 investors,” and that takes resources young companies might not have. Companies think this has the potential to be expensive money,” agrees Foster, referring to issuer requirements, such as engaging the portal, and preparing and distributing financial statements. For this reason, he thinks the exemption will probably be used in conjunction with other standard offerings.

To read the full article, click here.

To read our lawyers’ analysis of the new crowdfunding regulatory framework, click here.

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