Speaking a conference in Toronto on Thursday, Brad Duguid, the provincial minister of economic development and innovation, said his government wants to help legalize equity-based crowdfunding.
Premier Dalton McGuinty has requested the Ontario Securities Commission consider an exemption for crowdfunding in the Securities Act, Mr. Duguid said.
Currently, individuals may contribute small amounts of money to a company online as a donation or in return for perks such as pre-sales of a product. However, granting equity to a non-accredited investor through crowdfunding is illegal in Canada, and various due diligence and background checks are required for any equity-based investments.
But to make the most of the masses, all forms of crowdfunding need to be made legal, Mr. Duguid said.
“This is an incredibly important initiative that Ontario needs to take the lead on,” he told attendees of Technicity, a crowdfunding conference.
The OSC will engage in a consultation about the possibility of an exemption in early 2013, he said.
“I want you to know that I am a champion of opening up crowdfunding to equity-based opportunities,” he said.
Similar legislative changes would be necessary in each province in order to allow Canada to keep pace with the United States, which is currently in the process of drafting a framework to legalize equity-based crowdfunding investments through the Jumpstart Our Business Startups, or JOBS, Act enacted in April.
Mr. Duguid said he believes it’s “absolutely imperative” to keep pace with the United States on crowdfunding to make sure Canadian startups can compete and thrive at home.
The event, co-hosted by the City of Toronto and ITWorld Canada, saw guest speakers from across the country discussing the issues surrounding legalizing crowdfunding in Canada.
Many organizations across the country, including the Canadian Advanced Technology Alliance, have been urging the government to support equity-based crowdfunding after seeing the success of platforms such as Kickstarter and Indiegogo in raising money for startups.