Saskatchewan and Alberta securities regulators combine forces to increase financing opportunities for small businesses

15 janvier 2018 | Chad Eggerman, Jordyn Allan

( Disponible en anglais seulement )

Start-up crowdfunding is a form of equity funding for small businesses, like any other form of financing available to small businesses looking to raise capital. It is a process by which small businesses are able to raise funds from the public at large. There are different types of crowdfunding. Crowdfunding takes the form of donations (for example,, as well as pre-selling products before they are available to the public. This article is focussed on another type of crowdfunding called securities crowdfunding, which allows a business to raise funds by issuing securities (such as bonds or shares) to investors.

In the normal course, a business seeking to issue securities to the public must abide by strict rules and regulations. Briefly, a business is required file a prospectus with its provincial securities regulator (in Saskatchewan, the regulatory body is the Financial and Consumer Affairs Authority of Saskatchewan (“FCAA”)). Filing a prospectus can be very costly and burdensome for start-up and early stage organizations looking to get off the ground.

Securities crowdfunding evolved as a result of this highly regulated securities market in Canada. As an alternative for small businesses seeking to raise money, securities regulators in British Columbia, Saskatchewan, Manitoba, Quebec, New Brunswick and Nova Scotia have made available exemptions to facilitate the raising of capital through “start-up crowdfunding”, whereby the organization is allowed to raise relatively small amounts of capital by distributing securities to public investors without the need for a prospectus. It is an alternative method of financing for a small business that is outside the traditional financing channels (such as applying for a loan or attracting angel investors).

Recently, Saskatchewan and Alberta securities regulatory bodies have combined forces. As of December 1, 2017, the FCAA amended its start-up crowdfunding exemption to allow businesses in Saskatchewan and Alberta to raise funds from investors residing in either neighboring province. This means that if you are looking to raise money for a small business in Saskatchewan (or Alberta), you can receive money from investors in Saskatchewan, Alberta or any of the above participating jurisdictions. This amendment has a two-fold benefit: (i) it increases the risky investment opportunities for investors; and (ii) correspondingly increases the likelihood for start-ups to obtain financing and commercialize their goods or services. The fact that Saskatchewan small businesses can now seek funding from investors across all of the above participating provinces (which includes Alberta) is an invaluable modification to the requirements, particularly given the geographical proximity and similarities in industries between Alberta and Saskatchewan.

To allow for the change, the FCAA has amended its General Order 45-929 Start-up Crowdfunding Registration and Prospectus Exemptions.

Please note that organizations intending to conduct start-up crowdfunding in Saskatchewan must use a funding portal (not a requirement in Alberta). The following is a list of start-up crowdfunding portals operating in Saskatchewan: FrontFundr, Consider Funding and CanaDragon Enterprise Equity Crowdfunding Interchange.

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