Securities Crowdfunding For SMEs In Canada

May 26th, 2015

A New Form Of Financing To Consider By SMEs


Securities crowdfunding is a new, easier way for SMEs to raise capital from individuals through the Internet. Start-up companies will now be able to raise funds through securities crowdfunding in Québec and in the following provinces: British Columbia, Saskatchewan, Manitoba, New Brunswick and Nova Scotia.

In Canada, a company can raise capital in the two following ways: by way of a prospectus or by way of a prospectus exemption. Financing by way of prospectus is lengthy and costly in comparison with prospectus exemptions. Nevertheless, until recently, some prospectus exemptions required, with regards to admissibility to a prospectus exemption, that subscribers satisfy regulatory requirements pertaining to their status or their assets.

Inexpensive And Accessible

Securities crowdfunding, a new prospectus exemption, is inexpensive and accessible to all subscribers. Start-ups can raise capital through this type of crowdfunding by going through a funding portal that is registered with the securities regulators. They must also provide an offering document whose content is prescribed under the new legislation. This offering document is essentially a shorter and simpler version of a prospectus. Each year, an SME will be authorized to complete up to two securities crowdfunding offerings, in an amount of up to $250,000 per offering, for an annual maximum amount of $500,000. Each investor may subscribe to a maximum of $1,500 per crowdfunding offering.

To act as a registered funding portal, the portal must provide forms beforehand to the securities regulators. The portal must also ensure that the offering document is available to potential subscribers on the Internet.

An Attractive Method

Securities crowdfunding financing will help ensure greater visibility for start-up companies and also facilitate, in an inexpensive manner, the financing process by providing access to a broader range of potential subscribers via Internet portals.

For comprehensive, practical advice on this type of crowdfunding, contact Gilles Seguin, Partner and securities, mergers and acquisitions and corporate lawyer at or 514-397-5570.