The Ontario Securities Commission (“OSC”) has published a notice to businesses which are seeking to enter the peer-to-peer lending space in Canada. According to the OSC, depending on the structure, underlying facts and circumstances, a loan arrangement entered into on a peer-to-peer lending website may constitute a “security” as defined under the Ontario Securities Act. 

If the peer-to-peer businesses is trading securities it will be required to file a prospectus or rely on an exemption from the prospectus requirement and may be required to be registered as a dealer or advisor. Peer-to–peer lending websites which facilitate the matching of borrowers and lenders, may also be considered to trading in “securities” in other Canadian jurisdictions and may be subject to other Canadian laws applicable to financial institutions.

If you plan to operate a peer-to-peer lending website in Ontario or in any other Canadian jurisdiction you will legal advice to determine if you are trading in “securities” (evidence of indebtedness or investment contract) and whether you require registration as an exempt market dealer, restricted dealer or adviser.

If you are contemplating a peer-to-peer lending system in Canada, please call our founder Barbara Hendrickson at 647 403 4606 to discuss whether you need to be registered or require other discretionary relief to carry on your business. Barbara has extensive experience in this area having obtained exemption relief for the first peer-to-peer lending portal to obtain exemptive relief to operate in Canada.