The ASC’s new rule would allow start-ups to raise capital online
The ASC has announced its adoption of Multilateral Instrument 45-108: Crowdfunding (MI 45-108). The new rule, which is available immediately, provides issuers a crowdfunding prospectus exemption, as well as a funding portal registration framework.
The ASC’s implementation of MI 45-108 follows the recent adoption of ASC Rule 45-517: Prospectus Exemption for Start-up Businesses (ASC Rule 45-517), a rule introduced to help Alberta-based small business or start-up issuers access modest quantities of capital from Alberta investors. MI 45-108 would complement ASC rule 45-517, allowing for moderate financing that is generated strictly through an online funding portal across multiple Canadian jurisdictions.
"Small and medium-sized businesses have unique needs and often limited resources. We believe that the introduction of these rules creates an attractive financing platform for these companies to raise funds locally and across Canada, while at the same time providing an appropriate level of investor protection," said Stan Magidson, chair and CEO of the ASC.
Below are the key elements of the two rules, according to a release from the ASC:
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The ASC’s implementation of MI 45-108 follows the recent adoption of ASC Rule 45-517: Prospectus Exemption for Start-up Businesses (ASC Rule 45-517), a rule introduced to help Alberta-based small business or start-up issuers access modest quantities of capital from Alberta investors. MI 45-108 would complement ASC rule 45-517, allowing for moderate financing that is generated strictly through an online funding portal across multiple Canadian jurisdictions.
"Small and medium-sized businesses have unique needs and often limited resources. We believe that the introduction of these rules creates an attractive financing platform for these companies to raise funds locally and across Canada, while at the same time providing an appropriate level of investor protection," said Stan Magidson, chair and CEO of the ASC.
Below are the key elements of the two rules, according to a release from the ASC:
| ASC Rule 45-517 | MI 45-108 | |
| Investment Limits (per investor) |
$1,500/distribution $5,000 with positive suitability advice from a registered dealer |
$2,500/distribution $25,000 for accredited investors |
| Offering Limits | $250,000 per offering Maximum 2 offerings/year Lifetime limit $1,000,000 |
$1,500,000/12 months |
| Online Funding Portals | No registration exemption Use of funding portal not required |
Must use a registered funding portal |
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ASC seeks comments on gender disclosure
Is the exempt market the alternative that your clients have been looking for?
