General Overview of Canadian Securities Laws Relating to Raising Capital By Early Stage Companies: Briefing note for the CrowdFunding Campaign
February 4, 2012

February - 2012

SECURITIES LAW OVERVIEW TO CATA RE CROWDFUNDING

(Contact jreid@cata.ca to obtain a copy of this Briefing Note)


WARNING

PLEASE NOTE THE FOLLOWING:

1.                   THIS BRIEFING NOTE HAS BEEN PREPARED IN ORDER TO PROVIDE A HIGH LEVEL OVERVIEW OF CANADIAN SECURITIES LAWS TO MEMBERS OF A “CROWDFUNDING COMMITTEE” OF THE CANADIAN ADVANCED TECHNOLOGY ALLIANCE (“CATA”) IN CONNECTION WITH ITS CURRENT ADVOCACY CAMPAIGN RELATING TO “CROWDFUNDING”.

2.                   THIS OVERVIEW SUMMARIZES CERTAIN ASPECTS OF SECURITIES LAWS IN ONTARIO.  SECURITIES LAWS ARE REGULATED ON A PROVINCIAL BASIS IN CANADA AND WHILE SECURITIES LAWS ARE SUBSTANTIALLY SIMILAR ACROSS CANADA, THEY ARE NOT IDENTICAL.  IN MANY AREAS, THE VARIOUS PROVINCIAL REGULATORY AUTHORITIES HAVE COOPERATED IN DEVELOPING RULES WHICH APPLY IN ALL OR MANY OF THE PROVINCES.  AN EXAMPLE IS NATIONAL INSTRUMENT 45-106 (PROSPECTUS AND REGISTRATION EXEMPTIONS) WHICH INCLUDES MANY OF THE EXEMPTIONS DESCRIBED BELOW.  HOWEVER, EVEN WITH NATIONAL INSTRUMENT 45-106, CERTAIN EXEMPTIONS ARE NOT AVAILABLE IN SOME PROVINCES.

3.                   SECURITIES LAWS ARE VERY COMPLEX AND THIS OVERVIEW SHOULD ONLY BE USED FOR GENERAL INFORMATION PURPOSES.

Overriding Policy Considerations

As CATA undertakes an advocacy campaign encouraging securities regulators to adopt rules to facilitate crowdfunding, CATA must bear in mind that the securities regulators are dealing with the following two, often conflicting, policy objectives:

1.                   To protect the investing public; and

2.                   To facilitate capital formation.

++ Action Item: There follows a six page page General Overview of Canadian Securities Laws Relating to Raising Capital By Early Stage Companies  prepared by FMC Law, members of the CrowdSourcing Advocacy Committee. Please contact CATA CEO, John Reid at jreid@cata.ca to receive a copy of the Briefing Note.