UPDATE 1-Canada regulators propose rules for crowdfunding of startups
(Adds industry comment, background)
By Alastair Sharp
TORONTO, March 20 (Reuters) - The power of the crowd may soon be harnessed to help fund business startups in Canada, with several provincial securities regulators publishing proposed rules on Thursday that would allow large numbers of people to invest small amounts in promising projects.
The rule changes could offer a lifeline to the country's technology community, which often turns to U.S. investors and companies to fund early-stage growth.
Crowdfunding has proven a popular way for artists and others to raise money, but in Canada it has not involved equity stakes in projects.
The Ontario Securities Commission, the country's biggest capital markets watchdog, said its new rules would allow registered online portals to collect up to C$2,500 ($2,200) per investment from small-scale investors.
Such investors would be allowed to invest up to a total of C$10,000 a year, while the companies would be limited to raising C$1.5 million per year from crowdfunding.
"Today we have proposed new tools, which will transform Ontario's exempt market by providing greater access to capital for businesses and expanding investment opportunities for investors," OSC Chairman Howard Wetston said in a statement.
And it is not just tech companies that stand to benefit. Real estate, among others, stands ready to accept grass-roots funding. Continued...