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Thursday, April 24, 2014
Financial and Consumer Affairs Authority

What is Equity Crowdfunding? 

You may have heard of crowdfunding as a way for small businesses or creative projects to raise funds online from the public. Traditional crowdfunding usually raises money through donations or by pre-selling products.

 Equity crowdfunding is slightly different.

Instead of giving a donation or pre-purchasing a product, individuals are buying a stake in a small business or start-up and businesses are selling securities like shares, limited partnership units and promissory notes.

Why do we need Equity Crowdfunding?

Before equity crowdfunding, the rules for selling securities like shares, limited partnership units and promissory notes were more expensive, complicated, and time consuming for small businesses or start-ups to use.

We believe the Saskatchewan Equity Crowdfunding Exemption will help small businesses and start-ups raise a defined amount of money in an efficient and cost effective way.

But we are still protecting investors because we’ve placed conditions on equity crowdfunding, including limiting the amount of money individuals can risk in a single investment.  This should mitigate the risk to individual investors if the business is not successful.

Remember, all investments have risk but equity crowdfunding should be considered high risk.

Overview

  • 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. 

How to Get Started with Equity Crowdfunding

Are you interested in starting an equity crowdfunding website?

Are you a business?

Are you an investor?



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