Ontario Proposes $1.3 Million Limit on Crowdfunding

Ontario’s securities regulator is proposing new rules that will make it easier for companies to raise money through family and friends, while limiting capital-raising through “crowdfunding” on the Internet to C$1.5 million ($1.33 million).

“We have proposed new tools, which will transform Ontario’s exempt market by providing greater access to capital for business and expanding investment opportunities for investors,” Howard Wetston, chairman and chief executive officer of the Ontario Securities Commission, said in a statement today. “We have done so in a balanced and responsible manner that is intended to facilitate capital raising while maintaining an appropriate level of investor protection.”

The four exemptions include allowing businesses to raise capital based on a comprehensive disclosure document, as well as a family, friends and business associates exemption to allow start ups and early-stage businesses to raise capital within the business owners’ personal networks.

The regulator proposes an existing security holder exemption to let public companies raise capital from existing investors based on their public-disclosure record. The crowdfunding exemption allows companies to raise capital through an online platform registered with the regulator.

The OSC will gather commments until June 18, the regulator said.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net; David Scanlan at dscanlan@bloomberg.net Jacqueline Thorpe

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