Canadian securities regulators eye rules on crowdfunding
By Alastair Sharp
TORONTO Feb 27 (Reuters) - Canada's provincial securities regulators are looking to extend their jurisdiction to cover crowdfunding, the grass-roots form of fundraising being pursued by a growing number of start-ups and small ventures.
The move is part of a broader plan to revise rules around who is qualified to invest in a publicly-traded company without first seeing a prospectus.
Prospectus documents are designed to disclose the risks of buying into a company and protect vulnerable buyers. But some critics see them as onerous requirements that can hamper fund-raising for young enterprises.
The Canadian Securities Administrators (CSA), the council of provincial regulators, said on Thursday they aim to strike a balance between making more cash available to promising start-ups and ensuring investors aren't stretching beyond their means to invest in risky bets.
The proposals, which are open to public comment until the end of May, include a framework to manage the growth of online crowdfunding sites pitching private opportunities to investors who might then decide to invest between C$20,000 ($17,900) and C$150,000.
The Ontario Securities Commission, the biggest of the country's provincial regulators, said the proposed amendments would require changes to its definition of so-called accredited investors, who can legally invest without seeing a prospectus.
The proposed rules would also include plain language forms explaining risks associated with an investment, and cover the resale of securities, which could lead to the creation of secondary markets for private placements.
The regulators said they don't plan to alter dollar thresholds in existing rules to become a qualified investor. Continued...