The move to legalize equity crowdfunding in Canada is gaining steam in New Brunswick, with a push on to introduce some form of legislation in that province by this fall.
Fredericton-based entrepreneurGary Stairs has met twice with NewBrunswick premier David Alward in the past five weeks – includingyesterday – to lobby for legalization through the introduction of a newsecurities law or an amendment to existing ones within the next fewmonths.
“(Premier Alward) has assigned a couple of deputy ministers in hisoffice” to look at the crowdfunding legalization issue, said Stairs,chair of i-ATLANTIC, the east coast branch of i-CANADA, a nationalgroup in Ottawa that promotes Canada as a global digital leader.
Stairs revealed the ground being made in New Brunswick during a webinaron crowdfunding legalization heldFriday by i-CANADA, the CanadianAdvanced Technology Alliance (CATA) and IT World Canada, which is theowner of IT Business.ca.
Alward has also invited British Columbia premier Christy Clark to gether province involved in the crowdfunding legalization issue, Stairssaid.
“We’re aggressively collaborating with our colleagues in B.C.,” Stairssaid in reference to i-CANADA and CATA members lobbying forcrowdfunding changes on the west coast.
Although many legislative and bureaucratic hurdles would still have tobe surmounted to get laws passed or amended in New Brunswick, Stairs indicatedthe support of the premier at least carries substantial politicalweight to get the ball rolling.
Andrea Johnson, a partner at the Ottawa law firm Fraser Milner Casgrainwho is heading up the legal aspect of the crowdfunding lobbying effortsat CATA and i-CANADA, has also met with Ontario Securities Commission(OSC) officials to assess their support level for the cause.
“I thought it was a very productive meeting. The OSC is responsible forenforcing securities legislation in Ontario but ultimately it’s theprovincial legislature in Ontario that’s responsible for the type oflegislative change needed to make crowdfunding (legal) in Ontario,”Johnson told IT Business.ca in an interview earlier this month.
Fears startups will fly south
“Politicians do ask for guidance from regulators on how laws should bedrafted and what’s really manageable,” Johnson said during thatinterview. “So I do think it’s important for the securities regulatorsto be informed and for political leaders to make sure they’re relyingon the securities regulators to be informed.”
An online petition launched just over a week ago by CATA and i-CANADAto drum up support for crowdfunding legalization has resulted in“hundreds” of signatures so far, CATA president and CEO John Reid toldthe webinar. CATA and i-CANADA have joined forces with variousorganizations, companies and academic institutions to form an umbrellagroup called Invest Crowdfund Canada (ICC).
CATA also sent an open letter to industryminister Christian Paradiscalling for federal support on the issue.
Crowdfunding involves raising money over social mediachannels. The U.S. government recently legalized equity orinvestment crowdfunding, which allows companies — especially startups– to solicit equity investment in their firms using social networkingsites. In Canada, the only form of crowdfunding that’s legal involvescharitable causes or non-equity donations where givers can contributemoney but not in exchange for profits or an ownership stake in acompany.
Now that crowdfunding is legal in the U.S., groups such as CATA fearCanadian startups will fall behind their American counterpartsinaccessing capital or simply move south of the border to tap into equitycrowdfunding platforms there. Legalizing crowdfunding in Canadarequires laws to be amended in each province because securities lawfalls under the jurisdiction of the provinces, not Ottawa. .
