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Canadian provincial financial regulator Alberta Securities Commission (ASC) said on Monday it has adopted a new rule that introduces a crowdfunding prospectus exemption for issuers as well as a registration framework for funding portals. The change enables small and mid-sized enterprises (SMEs) to raise funds online.
The new rule, called Multilateral Instrument 45-108 Crowdfunding (MI 45-108), came into effect immediately after its adoption. It completes the ASC Rule 45-517 Prospectus Exemption for Start-up Businesses (ASC Rule 45-517), which was introduced recently and which aims to facilitate small or start-up issuers seeking to raise modest amounts of capital from Alberta investors.
“Small and medium-sized businesses have unique needs and often limited resources. We believe that the introduction of these rules creates an attractive financing platform for these companies to raise funds locally and across Canada, while at the same time providing an appropriate level of investor protection,” said Stan Magidson, chairman and CEO of the ASC.
Following are details about the recently adopted ASC Rule 45-517 and the MI 45-108 rules introduces in Alberta province:
ASC Rule 45-517
$250,000 per offering $250,000 per offering
|Online Funding Portals|
No registration exemption.
|Must use a registered funding portal|
Crowdfunding is a type of financing where funds are provided by a large number of investors, i.e. crowd in crowdfunding. Individuals and enterprises use this type of financing for personal projects, to achieve corporate growth and expansion, as well as for funding social activities.
In Canada, financial markets fall under the regulation of provincial watchdogs and legislation rules may vary in from province to province. The ASC is the regulatory body for the Alberta province.