Cambridge House held its Canadian Investor Conference event in Toronto, Ontario on 26 September 2014. The event was geared toward investors by bringing top thought leaders and companies who are interested in accessing investors. BoardSuite Founder, CEO Oscar A Jofre was invited to participate in a panel along with John McCoach President TSX-V, Richard W. Carleton CEO, CSE, Cromwell Coulson CEO of OTC Market Groups, David Franklin Managing Director of WoodsWater Capital LP to discuss where is the money. Full disclosure, I work with Oscar but this is a message and topic that are important for a wider audience to hear.
Oscar further clarified that there are two exemptions that the securities regulators provide to allow companies to raise capital from Canadians using crowdfunding. The Accredited Investor exemption is available across Canada, and the Offering Memorandum (“OM”) exemption which is available across Canada except for Ontario (although Ontario has proposed an OM model). During the Q&A period, someone from the crowd asked a question why, based on his research, only the 1% of Canadians is being given access to investing in private deals. This gentleman stated that he and others would also like to be given access to invest. This is the question being asked around the world by investors who are tired of being left out of investment opportunities. In some respects, equity crowdfunding is the result of those complaints. Richard Carleton CEO of CSE commented that “equity crowdfunding should not be allowed as it will result in fraud”. The panel further commented that private companies should go public to access capital and equity crowdfunding is ok for small rewards based campaigns. Oscar Jofre stepped in to provide some facts stating;
Not all companies want to go public (nor in my opinion should they if they are not ready or able to afford the high cost of maintaining a listing) and now there are secondary markets proposing to launch that would allow private company shareholders to sell their shares (Aequitas and the TMX are launching private company exchanges).
Crowdfunding also has requirements for disclosure and reporting. Regulations dictate a certain level of reporting which generally forms the minimum standard. Crowdfunding portals themselves usually have their own standards above and beyond those required by regulators. Why would the portals have extra standards? Because they realize to be successful they need to protect their investors.
In summary, Equity Crowdfunding is LEGAL in Canada under the Accredited Investor and OM exemptions and the rules are in place and will constantly be revisited to protect investors. But regulation only goes so far, so caution to all investors is to be diligent and do your homework to investigate an opportunity you invest in, whether public or private. Posted from : http://www.crowdfundinsider.com/2014/10/51626-crowdfunding-canada-legal-illegal/ |