Equity Crowdfunding is Legal in Saskatchewan

December 13, 2013 @ 11:04 am By

As of last week, equity crowdfunding is legal in the Canadian province of Saskatchewan.  The Financial and Consumer Affairs Athority (FCAA) is now allowing small businesses and startups to offer equity to residents via the Saskatchewan Equity Crowdfunding Exemption (SECE).

Canada 5 Dollars HockeyThe FCAA justified their decision as a recognition to the previous difficulties for small businesses to raise capital to finance their company.  The rules for selling securities like shares, limited partnership units and promissory notes have been expensive, complicated, and time consuming for small businesses or start-ups to use.

The FCAA firmly believes the Exemption will help small businesses and start-ups raise a defined amount of money in an efficient and cost effective way.  The agency continues to address investor protection by limiting the amount of money individuals can risk in a single investment.  Since equity crowdfunding is broadly recognized as a high risk investment the regulators believe the limits should mitigate the risk to individual investors.

FCAA SaskatchewanThe overview of the Exemption is as follows:

  • Both the business and the investor must be located in Saskatchewan
  • Businesses can make two, six-month offerings of $150,000 each over the course of a year.
  • No person may invest more than $1,500 in an offering.
  • The business cannot be a reporting issuer or an investment fund and cannot offer derivative type securities.
  • Businesses must give FCAA notice of their intention to issue an offering 10 business days before posting online.
  • The business cannot charge investors a commission or other amounts.
  • The business must report their sales to FCAA within 30 days of the offering’s close.
  • There are no fees payable to the FCAA for the offering.

This initiative is part of the  government’s Plan for Growth: Vision 2020 and Beyond.  The government has  highlighted the importance of helping Saskatchewan small businesses and start-ups meet the challenges of growth.

In a quote from Gordon Wyant, Minister responsible for the FCAA,  he acknowledged the compelling need to remove red tape and barriers for businesses in raising funds,

“Small businesses play a central role in our economy,” Minister responsible for FCAA Gordon Wyant said. “Our government’s goal is to make sure that Saskatchewan continues to be one of the best places in Canada to start and grow a small business through competitive taxes, a continued reduction of red tape, measures to address the province’s labour shortage, and now through an additional source of funding.”

Dave WildFCAA Chair and CEO Dave Wild declared that equity crowdfunding will help fill the void in funding for small businesses,

“We know that the current rules for selling a stake in a company can be expensive, complicated and time consuming for small businesses or start-ups,” FCAA Chair and CEO Dave Wild said. “Equity crowdfunding will help fill the fundraising gap for these businesses so that they can compete in our market. This is also an opportunity for Saskatchewan people to invest in Saskatchewan businesses – it’s a unique opportunity to help grow our provincial economy.”

The FCAA has published a series of documents on their site explaining equity crowdfunding for the province.

Source : http://www.crowdfundinsider.com/2013/12/28337-equity-crowdfunding-legal-saskatchewan/

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