On February 21, 2019, the Canadian Securities Administrators (CSA) published CSA Staff Notice 45-324 Update on the Start-up Crowdfunding Registration and Prospectus Exemptions (CSA Staff Notice 45-324), providing an update on the progress of a proposed national instrument (the proposed National Instrument) that will replace the start-up crowdfunding exemption orders.

In May 2015, the securities regulatory authorities of British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia (the participating jurisdictions), adopted substantially harmonized registration and prospectus exemptions (together, the start-up crowdfunding exemptions) that allow start-ups and early-stage businesses to raise capital in these jurisdictions. The participating jurisdictions implemented the start-up crowdfunding exemptions by way of local blanket orders and were occasionally amended (the start-up crowdfunding exemption orders).

The CSA is in the process of developing a proposed National Instrument with the same key features the start-up crowdfunding exemption orders, with targeted amendments to improve harmonization and the effectiveness of crowdfunding as a capital raising tool for start-ups and early stage businesses.  Subject to obtaining the necessary approvals, CSA staff will publish the proposed National Instrument for comment.

While the start-up crowdfunding exemption orders expire on May 13, 2020, CSA staff expect that proposed National Instrument will not be implemented by this date.  Until the proposed National Instrument is adopted, staff of the participating jurisdictions anticipate that they will amend the start-up crowdfunding exemption orders so that they will remain available for issuers and funding portals.

CSA Staff Notice 45-324  is available for download from the websites of the participating jurisdictions.

For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.

This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.