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PART 3 OF A SERIES ON CROWDFUNDING

On June 17, 2013, the Ontario Securities Commission (the OSC) issued a decision approving the first “equityesque” crowdfunding platform in Canada.

Visit these links for a synopsis of crowdfunding and equity crowdfunding.

The decision by the OSC allows MaRS VX, a not-for-profit entity and a wholly-owned subsidiary of MaRS Discovery District to operate an online platform to connect impact issuers and accredited investors. The portal itself will not be part of issuing the securities, rather it simply acts as a “meeting ground”.

The OSC defines an “impact issuer” as a small or medium-sized venture or fund (with less than $25 million in revenues, a social or environmental prioritized mission, earned revenues and proven impact, including for-profit corporations, non-profit corporations, for-profit cooperatives and non-profit cooperatives).

Once an impact issuer satisfies the MaRS VX’s criteria, it will be able to provide information on its proposed offerings and operations to prospective investors through the MaRS VX portal.

While the exception for MaRS VX is exciting and appears to be a significant step in the direction of one day permitting equity crowdfunding, it is important to highlight that the portal is only for accredited investors and is limited to impact issuers.

At this time, there is no equity crowdfunding portal in Canada that brings non-accredited investors and businesses together.

The OSC decision can be found here.

Seth B. Abbey, a corporate lawyer at Spiegel Sohmer with a focus on mergers and acquisitions, private equity financing and tax-driven reorganizations, is available to answer your questions about this and other topics.