The Ontario Securities Commission (OSC) recently published Ontario Instrument 45-505 Relief in respect of the Distribution of Securities through a Funding Portal Operated by Silver Maple Ventures Inc. The OSC is providing issuers with relief from the requirement to file a prospectus in respect of crowdfunding distributions of securities through a funding portal operated by Silver Maple Ventures Inc. The order provides that issuers in Ontario are exempt from the requirement to file a prospectus in respect of a crowdfunding distribution of securities facilitated through the funding portal known as “FrontFundr,” which is operated by the Filer, an exempt market dealer in Ontario, provided that certain conditions are satisfied, including that:
- The distribution is of the issuer’s eligible securities;
- The issuer is not a reporting issuer or an investment fund;
- The issuer prepares an offering document that is made available to purchasers on the FrontFundr website;
- The aggregate amount raised by the issuer in the crowdfunding distribution does not exceed $250,000 and the issuer completes no more than two distributions in a calendar year; and
- Each purchaser invests no more than $1,500 (or no more than $5,000 if the purchaser has obtained positive suitability advice from a registered dealer).
The order is intended to facilitate access to new sources of capital for those start-ups and small and medium sized enterprises that seek to conduct crowdfunding distributions of securities through the FrontFundr portal, without compromising investor protection. According ot the OSC his is particularly relevant in the current COVID-19 business environment, when it may be especially challenging for these categories of businesses to access capital. The order substantially mirrors prospectus exemptions provided to non-reporting issuers by certain other Canadian jurisdictions, including British Columbia, which adopted registration and prospectus exemptions by means of blanket orders intended to facilitate capital-raising through securities crowdfunding.
The order can be found at: https://www.osc.gov.on.ca/en/SecuritiesLaw_rule_20200528_45-505_general-order-silver-maple-ventures.htm
For more information, please call Barbara Hendrickson at BAX Securities Law (647) 4031 -4606. 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.