Welcome to Equity Crowdfunding !
ROBIC,LLPwww.robic.ca
info@robic.com
MONTREAL1001Square-Victoria-BlocE-8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.:+1514987-6242Fax:+1514845-7874QUEBEC2828LaurierBoulevard,Tower1,Suite925
Quebec,Quebec,CanadaG1V0B9
Tel.:+1418653-1888Fax.:+1418653-0006
WELCOMETOEQUITYCROWDFUNDING!
VINCENTBERGERONANDMARTINGAUTHIER*
ROBIC,
LLP
L
AWYERS,PATENTANDTRADE-MARKAGENTS
“EquitycrowdfundingisnowallowedinCanadaandadaptedtostart-upcompaniesin
Quebec,BritishColumbia,Saskatchewan,Manitoba,NewBrunswickandNova
Scotia.”
Companieslookingforfinancingoncrowdfundingportalscanquicklybecomethe
darlingsofeagertoinvestinternetuserswithjustafewclicks.Thesnowballeffect
thatsetsincanlaterleadtosignificantand,forsome,unexpectedresults.Moreand
morecompaniesachievesuccess,althoughperhapsmoremodestlybutjustas
effectively,withthehelpofcrowdfunding.Thegrowingimportanceofthismethodof
raisingcapitalontheinternethasledCanadiansecuritiesregulationauthoritiesto
institutemeasurestoprovideaccesstoothersourcesofcapital,byrelaxingthe
registrationrulesandprospectusrequirementsforissuersofsecurities.
ContextoftheProposedandAdoptedMeasures
Astoucheduponinthefirstarticleofourseriesonthesubject,“equity”capital
financingisoneofthreetypesofcrowdfunding,alongwith“pledge”crowdfunding
and“donationandreward”crowdfunding.Itamountstothecollectionoffundsfroma
potentiallyhighnumberofpurchasers,byissuingsharesormarketablesecurities
withareturnoninvestment(ROI),suchasdebtsecurities(bonds)orsecuritiesthat
confertherighttoparticipateinthecompany(shares),throughaninternetportal.To
issuesecuritiestothepublicandreceivecapital,anissuermustnormallyfilea
prospectuswiththeappropriateauthorityinitsprovinceorterritory.However,most
emergingcompaniessimplydonothavetheresourcestofulfilthisobligation,which
canbecostly.Untilrecently,theCanadianlegalframeworkregardingequity
crowdfundingwasnotatalladaptedtothemeansortheneedsofstart-up
companies.
InQuebec,DraftRegulation45-108RespectingCrowdfundingwasfiledonMarch
20th,2014,andisstillawaitingsanctionfromthecompetentfederalbodies/agencies.
Thisregulationproposesasolutiontotheproblemmentionedabove,byputtingin
©CIPS,2015.*FromROBIC,LLP,amultidisciplinaryfirmofLawyers,andPatentandTrade-markAgents.Published
intheFall2015(Vol.19,no.1)Newsletterofthefirm.Publication068.195E.
ROBIC,LLPwww.robic.ca
info@robic.com
MONTREAL1001Square-Victoria-BlocE-8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.:+1514987-6242Fax:+1514845-7874QUEBEC2828LaurierBoulevard,Tower1,Suite925
Quebec,Quebec,CanadaG1V0B9
Tel.:+1418653-1888Fax.:+1418653-0006
2
placeprospectusexemptionsforcompanieswhowishtousethistypeoffinancing.In
themeantime,itisrathertheMultilateralCSANotice45-316,adoptedonMay14th,
2015,bythesecuritiesregulatoryauthoritiesofBritishColumbia,Saskatchewan,
Manitoba,Quebec,NewBrunswickandNovaScotia,thatintroducedharmonized
registrationandprospectusexemptions,allowingstart-upcompaniestoraisecapital
inthesejurisdictions,undercertainconditions.ThesameNoticealsoestablishes
anothertypeofexemption,applicabletofundingportalsthistime,whichprecludes
themfromhavingtoregisterasaneligibleinvestmentdealer.AsforOntario,itstands
apartandpromisestopublishitsownexemption.Theprovince’sprojectissaidto
drawstronglyfromtheRegulation45-108inordertocoverbothstart-upsandwell
establishedcompanies.It’sadoptionisscheduledforFall2015.
WhatStart-upsNeedtoKnow
InQuebec,theAutoritédesmarchésfinancierssuggestsvalidatingaseriesofpoints
forstart-upcompanieswhowishtotakeadvantageoftheprospectusexemptions
underNotice45-316tolaunchacrowdfundingcampaign.Ideally,thesecompanies
shouldevaluateothersourcesoffinancing,suchasaloanfromafinancialinstitution,
estimatethetimeandeffortrequiredtopreparethecampaign,decideonthetypeof
securitiestobeoffered,aswellastheirquantityandsubscriptionprice,andabove
all,makesurethatitwillbepossibletomanageahighnumberofpurchasers.
Oncetheseelementshavebeenchecked,companieswhowishtogoaheadneedto
complywiththeprospectusexemptionconditions.Theymust:
·Havetheirheadofficeinoneofthesixparticipatingprovinces;
·Beanon-reportingissuer,undertheapplicablesecuritieslegislation;
·Useanonlinefundingportalthatreliesonaregistrationexemptionforstart-up
companies,orwhichisoperatedbyaregisteredinvestmentdealerwhomeets
theconditionsoftheapplicablesecuritieslegislation;
·Provideanofferingdocumentontheportalthatincludesbasicinformationon
thecompany,itsdirectorsandexecutiveofficers,andtheircampaign,including
howtheyintendtousethefundsraisedandtheminimumofferingamount;
·Issueeligiblesecurities,suchascommonshares,non-convertiblepreference
sharesornon-convertibledebtsecuritieslinkedtoaninterestrate;
·Limitpossibleinvestmentsto$1500perpurchaser;
ROBIC,LLPwww.robic.ca
info@robic.com
MONTREAL1001Square-Victoria-BlocE-8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.:+1514987-6242Fax:+1514845-7874QUEBEC2828LaurierBoulevard,Tower1,Suite925
Quebec,Quebec,CanadaG1V0B9
Tel.:+1418653-1888Fax.:+1418653-0006
3
·Providetoeachpurchaseracontractualrighttowithdrawtheirinvestmentwithin
48hoursofeitherthepurchaser’ssubscriptionornotificationbythefunding
portaltothepurchaserthattheofferingdocumenthasbeenamended;
·Raiseamaximumof$250,000percrowdfundingcampaign.Nomorethantwo
campaignsarepermittedpercalendaryear,foreachcompany;
·Makesurethatnoneofthepromotors,controlpersons,officersordirectorsof
thefundingportalisoneoftheprincipalsoftheissuer;
·Raisetheminimumamountoffundsprojectedintheofferingdocumentwithin
90daysofthedocumentbeingmadeavailabletopurchasersontheportal.The
portalkeepsthefundsintrustuntiltheminimumamountisreached,afterwhich
thesecuritiescanbeissued.Iftheminimumamountisnotmet,theportal
reimbursesthefundstopurchasers.
TheupcomingentryintolawofRegulation45-108RespectingCrowdfundingwill
broadenthescopeofprospectusexemptionsofferedunderthe45-136Noticeto
accommodatethecorporateneedsofwealthiercompaniesorinamoreadvanced
stateofdeveloppment.Forexample,bothreportingandnon-reportingissuerswillbe
eligibletousethem,andtheywillbeabletosecurefundsofupto1.5milliondollars
peryear,comparedto250000$withthe45-316Notice.However,saleswillneedto
bemadethroughaportalthatisoperatedbyaregisteredinvestmentdealer,and
companieswillneedtomeetcertainrequirementsregardingtheircurrentfinancial
status,theuseofthefundedproduct,andotherimportantevents.
Thisconcludesourthirdarticleoncrowdfunding.Inthefirstarticle,wegavean
overviewofthephenomenonitself,tosubsequentlybringtolighttheintellectual
propertyissuesatstakeinthesecondarticle,onlytoconcludeherewithadetailed
analysisofequitycrowdfundingforstart-ups.Wewillissueafourtharticleonthe
subject,onceRegulation45-108RespectingCrowdfundingcomesintoeffect.Until
then,maytheequitycrowdfundingbegin!
ROBIC,LLPwww.robic.ca
info@robic.com
MONTREAL1001Square-Victoria-BlocE-8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.:+1514987-6242Fax:+1514845-7874QUEBEC2828LaurierBoulevard,Tower1,Suite925
Quebec,Quebec,CanadaG1V0B9
Tel.:+1418653-1888Fax.:+1418653-0006
4
Pourdesservicesdeconseilsdansledomainedelapropriété
intellectuelleetdestechnologiesdel’informationetdescommunications
(incluantlesservicesd’agentsdebrevetsetdemarquesdecommerce)
demêmequedesservicesjuridiques.
ROBIC,ungrouped’avocatsetd’agentsdebrevetsetdemarquesde
commercevouédepuis1892àlaprotectionetàlavalorisationdelapropriété
intellectuelledanstouslesdomaines:brevets,dessinsindustrielsetmodèles
utilitaires;marquesdecommerce,marquesdecertificationetappellations
d’origine;droitsd’auteur,propriétélittéraireetartistique,droitsvoisinsetde
l’artisteinterprète;informatique,logicielsetcircuitsintégrés;biotechnologies,
pharmaceutiquesetobtentionsvégétales;secretsdecommerce,know-howet
concurrence;licences,franchisesettransfertsdetechnologies;commerce
électronique,distributionetdroitdesaffaires;marquage,publicitéet
étiquetage;poursuite,litigeetarbitrage;vérificationdiligenteetaudit.ROBIC,
agroupoflawyersandofpatentandtrademarkagentsdedicatedsince1892to
theprotectionandthevalorizationofallfieldsofintellectualproperty:patents,
industrialdesignsandutilitypatents;trademarks,certificationmarksand
indicationsoforigin;copyrightandentertainmentlaw,artistsandperformers,
neighbouringrights;computer,softwareandintegratedcircuits;
biotechnologies,pharmaceuticalsandplantbreeders;tradesecrets,know-
how,competitionandanti-trust;licensing,franchisingandtechnology
transfers;e-commerce,distributionandbusinesslaw;marketing,publicityand
labelling;prosecutionlitigationandarbitration;duediligence.
®/MD
COPYRIGHTER
TM/MC
IDEASLIVEHERE
®/MD
ILATOUTDEMÊMEFALLUL’INVENTER!
®/MD
LAMAÎTRISEDESINTANGIBLES
®/MD
LEGERROBICRICHARD
®/MD
NOSFENÊTRESGRANDESOUVERTESSURLEMONDEDESAFFAIRES
®/MD
PATENTER
®/MD
ou«R»
®/MDstylisé
ROBIC®/
MD
ROBIC,LLPwww.robic.ca
info@robic.com
MONTREAL1001Square-Victoria-BlocE-8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.:+1514987-6242Fax:+1514845-7874QUEBEC2828LaurierBoulevard,Tower1,Suite925
Quebec,Quebec,CanadaG1V0B9
Tel.:+1418653-1888Fax.:+1418653-0006
5
OustyliséROBIC++++
®/MDstylisé
ouROBIC+DROIT+AFFAIRES+SCIENCES+ARTS
®/MDstylisé
ouROBIC+LAW+BUSINESS+SCIENCE+ART
®/MDstylisé
THETRADEMARKERGROUP
TM/MC
TRADEMARKER
TM/MC
VOSIDÉESÀLAPORTÉEDUMONDE,DESAFFAIRESÀLAGRANDEURDE
LAPLANÈTE
®/MD
YOURBUSINESSISTHEWORLDOFIDEAS;OURBUSINESSBRINGSYOUR
IDEASTOTHEWORLD
®/MD
MarquesdecommercedeROBIC,S.E.N.C.R.L.poursesservicesde
conseilsdansledomainedelapropriétéintellectuelleetdes
technologiesdel’informationetdescommunications(incluantles
servicesd’agentsdebrevetsetdemarquesdecommerce)demême
quesesservicesjuridiques
*************************************************************************************************
*
Forservicespertainingtointellectualproperty,technologyand
communicationlawandrelatedmatters(includingpatentandtrade-mark
agencyservices)aswellaslegalservices.
ROBIC,ungrouped’avocatsetd’agentsdebrevetsetdemarquesde
commercevouédepuis1892àlaprotectionetàlavalorisationdelapropriété
intellectuelledanstouslesdomaines:brevets,dessinsindustrielsetmodèles
utilitaires;marquesdecommerce,marquesdecertificationetappellations
d’origine;droitsd’auteur,propriétélittéraireetartistique,droitsvoisinsetde
l’artisteinterprète;informatique,logicielsetcircuitsintégrés;biotechnologies,
pharmaceutiquesetobtentionsvégétales;secretsdecommerce,know-howet
concurrence;licences,franchisesettransfertsdetechnologies;commerce
électronique,distributionetdroitdesaffaires;marquage,publicitéet
étiquetage;poursuite,litigeetarbitrage;vérificationdiligenteetaudit.ROBIC,
ROBIC,LLPwww.robic.ca
info@robic.com
MONTREAL1001Square-Victoria-BlocE-8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.:+1514987-6242Fax:+1514845-7874QUEBEC2828LaurierBoulevard,Tower1,Suite925
Quebec,Quebec,CanadaG1V0B9
Tel.:+1418653-1888Fax.:+1418653-0006
6
agroupoflawyersandofpatentandtrademarkagentsdedicatedsince1892to
theprotectionandthevalorizationofallfieldsofintellectualproperty:patents,
industrialdesignsandutilitypatents;trademarks,certificationmarksand
indicationsoforigin;copyrightandentertainmentlaw,artistsandperformers,
neighbouringrights;computer,softwareandintegratedcircuits;
biotechnologies,pharmaceuticalsandplantbreeders;tradesecrets,know-
how,competitionandanti-trust;licensing,franchisingandtechnology
transfers;e-commerce,distributionandbusinesslaw;marketing,publicityand
labelling;prosecutionlitigationandarbitration;duediligence.
®/MD
COPYRIGHTER
TM/MC
IDEASLIVEHERE
®/MD
ILATOUTDEMÊMEFALLUL’INVENTER!
®/MD
LAMAÎTRISEDESINTANGIBLES
®/MD
LEGERROBICRICHARD
®/MD
NOSFENÊTRESGRANDESOUVERTESSURLEMONDEDESAFFAIRES
®/MD
PATENTER
®/MD
orstylizedR
®/MD
ROBIC®/
MD
orstylizedROBIC++++
®/MD
orstylizedROBIC+DROIT+AFFAIRES+SCIENCES+ARTS
®/MD
orstylizedROBIC+LAW+BUSINESS+SCIENCE+ART
®/MD
THETRADEMARKERGROUP
TM/MC
TRADEMARKER
TM/MC
VOSIDÉESÀLAPORTÉEDUMONDE,DESAFFAIRESÀLAGRANDEURDE
LAPLANÈTE
®/MD
ROBIC,LLPwww.robic.ca
info@robic.com
MONTREAL1001Square-Victoria-BlocE-8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.:+1514987-6242Fax:+1514845-7874QUEBEC2828LaurierBoulevard,Tower1,Suite925
Quebec,Quebec,CanadaG1V0B9
Tel.:+1418653-1888Fax.:+1418653-0006
7
YOURBUSINESSISTHEWORLDOFIDEAS;OURBUSINESSBRINGSYOUR
IDEASTOTHEWORLD®/MD
Trade-marksofROBIC,LLPforitsservicespertainingtointellectual
property,technologyandcommunicationlawandrelatedmatters
(includingpatentandtrade-markagencyservices)aswellaslegal
services