CSA expands crowdfunding with Multilateral Instrument 45-108

Posted by David Kandestin, Associate.

On November 5, 2015, the securities regulatory authorities in Manitoba, Ontario, Québec, New Brunswick and Nova Scotia published in final form Multilateral Instrument 45-108 Crowdfunding, which introduces a crowdfunding prospectus exemption for issuers as well as a registration framework for funding portals.

The MI 45-108 crowdfunding regime is intended to enable businesses to benefit from greater access to capital from a large number of investors online, through a funding portal operated by a registered dealer. British Columbia is one of the jurisdictions that implemented a crowdfunding regime by way of a local blanket order on May 14, 2015 (Multilateral CSA Notice 45-316), but B.C. is not a jurisdiction participating in MI 45-108.

The securities regulatory authorities believe MI 45-108 will coexist with and be complementary to the start-up crowdfunding exemptions already implemented.  Unlike the blanket order, MI 45-108 is available to both reporting and non-reporting issuers and has higher limits on the amount issuers can raise ($1.5 million per year, versus $500,000 per year under the blanket order). MI 45-108 imposes ongoing disclosure obligations and requires that investments be made through a registered crowdfunding portal.

Provided all necessary ministerial approvals are obtained, MI 45-108 will come into force on January 25, 2016.