In an important step towards establishing equity crowdfunding in Canada, the Ontario Securities Commission (the “OSC”) has released a significant decision which allows MaRS VX, a not-for-profit entity and a wholly-owned subsidiary of MaRS Discovery District, to operate an online platform (the “MaRS Platform”). The MaRS Platform will facilitate “impact investing” by bringing together Ontario accredited investors and small or medium-sized ventures or funds. To qualify, ventures or funds must have less than $25 million in revenues at the time of initial access to the online platform, a prioritized mission, earned revenues and proven “social impact” or “environmental impact”, including for-profit corporations, non-profit corporations, for-profit cooperatives and non-profit cooperatives. The MaRS Platform will have two portals: one public and the other private (the “Private Portal”).
The decision grants exemptive relief to MaRS VX from a major Ontario securities law hurdle to operating crowdfunding sites: the know-your-client and suitability requirements (the “KYC Requirements”). Seeking to balance investor protection concerns and the objective of MaRS VX to bring together investors and certain issuers in need of capital, the OSC’s decision sets out operating parameters for the MaRS Platform. These requirements include:
1. Access to the Private Portal will be password-protected. The Private Portal will only be accessible to:
a. Ontario “accredited investors” who have signed a written agreement and provided supporting documentation to establish their status and their residence; and
b. issuers seeking to raise capital on a private placement basis via the issuance of debt or equity securities that have satisfied certain access criteria, provided supporting documentation and signed a written agreement agreeing to comply with the certain OSC-imposed requirements.
2. MaRS VX will monitor the Private Portal and any interactive communication channels on its website. MaRS VX must remove any material from the Private Portal or its website that it deems inappropriate, including material that raises investor protection concerns.
3. Directors and officers of issuers using the Private Portal will provide comprehensive background information to MaRS VX and consent to criminal record and other background checks.
4. MaRS VX must comply the registration requirements of an exempt market dealer under applicable Ontario securities laws, with the exception of the KYC Requirements.
Requirements continue on next page.
Pages: 1 2