Regulation 45-108 respecting Crowdfunding – An innovative opportunity for developing companies

May 2014 – New Regulation 45-108 brings a novel idea to the Canadian market: enabling small businesses to attract capital from a larger number of investors at a low cost, within a simple and efficient legal framework.

On March 20, 2014, the participating members of the Canadian Securities Administrators (“CSA”) announced the proposal for regulating crowdfunding in Canada1.

This type of funding will be available to all private or public corporations, enabling them to raise a maximum of $1.5 million. After making the offering, the Issuer must provide investors with financial information. The CSA is taking certain measures to protect investors, in particular by limiting investment to $2,500 per project and to an overall annual total of $10,000. Investors will also have access to summary financial information from the Issuer, but must sign a risk acknowledgement form relating to their investment.


Crowdfunding is a current method by which a project can be funded (for example, by donation, rewards or pre-purchase of a product) by collecting small amounts of money from a potentially large number of people through an Internet portal that acts as a market intermediary.

In Canada, crowdfunding activities limited to donations, rewards or pre-purchase (of products) are not usually considered to be securities offerings. However, a company that makes a crowdfunding offering based on loans between individuals, or by securities (such as shares), is usually subject to the prospectus requirement set out in the securities statutes that apply in Canada. It could receive investments from qualified investors at the same time.

In Canada, all investments must be made from a portal2 that is properly registered as a broker. The portal will involve certain rights, in particular the opportunity to conduct background checks on the Issuer and its senior officers.

Our Business Law Group will be pleased to help you with your projects and provide you with any information you may need in this area.