Equity Crowdfunding is Officially Legal in Saskatchewan

According to the National Crowdfunding Association of Canada (NCAC), the Financial and Consumer Affairs Authority (FCAA) will allow small businesses and startups in Saskatchewan to sell stakes in their companies to residents of the province through the “Saskatchewan Equity Crowdfunding Exemption”.

This is huge news for Canada. Since US President Barack Obama signed the JOBS (Jumpstart Our Business Startups) Act in 2012, Canadian startups and small and medium-sized businesses have been pushing for crowdfunding. The JOBS Act opened the door to Internet-sourced funding for startups in the United States.

The government’s “Plan for Growth: Vision 2020 and Beyond” highlighted the importance of helping Saskatchewan small businesses and start-ups meet the challenges of growth.

“Small businesses play a central role in our economy,” said the provincial minister responsible for FCAA, Gordon Wyant. “Our government’s goal is to make sure that Saskatchewan continues to be one of the best places in Canada to start and grow a small business through competitive taxes, a continued reduction of red tape, measures to address the province’s labour shortage, and now through an additional source of funding.”

FCAA CEO Dave Wild said the organization acknowledged that the current rules for selling a stake in a company could be expensive, complicated and time consuming for small businesses or start-ups. “Equity crowdfunding will help fill the fundraising gap for these businesses so that they can compete in our market,” he said. “This is also an opportunity for Saskatchewan people to invest in Saskatchewan businesses – it’s a unique opportunity to help grow our provincial economy.”

As recently as yesterday the Financial Post reported that Ontario is thinking about joining in the fun too. “A proposed prospectus exemption to allow crowdfunding will be published by the Ontario Securities Commission in the first quarter of next year, with an accompanying ‘registration framework’ for online funding portals.

It looks like the Praries beat Ontario to it.

The FCAA said that “protecting the public interest is at the top of FCAA’s priorities”. In addition to other precautions, the Equity Crowdfunding Exemption limits the amount of money individual investors can risk and how much individual companies can raise.

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