Push to legalize crowdfunding gains political steam in New Brunswick: Crowdfunding advocates aim to get provincial legislation introduced by this fall: By: Christine Wong, IT Business
July 4, 2012
The move to legalize equity crowdfunding in Canada is gaining steam in New Brunswick, with a push on to introduce some form of legislation in that province by this fall.
-based entrepreneur Gary Stairs has met twice with New Brunswick premier David Alward in the past five weeks – including yesterday – to lobby for legalization through the introduction of a new securities law or an amendment to existing ones within the next few months.
“(Premier Alward) has assigned a couple of deputy ministers in his office” to look at the crowdfunding legalization issue, said Stairs, chair of i-ATLANTIC, the east coast branch of i-CANADA, a national group in Ottawa that promotes Canada as a global digital leader.
Stairs revealed the ground being made in New Brunswick during a webinar on crowdfunding
legalization held Friday by i-CANADA, the Canadian Advanced Technology Alliance (CATA) and IT World Canada, which is the owner of IT Business.ca.
Alward has also invited British Columbia premier Christy Clark to get her province involved in the crowdfunding legalization issue, Stairs said.
“We're aggressively collaborating with our colleagues in B.C.,” Stairs said in reference to i-CANADA and CATA members lobbying for crowdfunding changes on the west coast.
Although many legislative and bureaucratic hurdles would still have to be surmounted to get laws passed or amended in New Brunswick
, Stairs indicated the support of the premier at least carries substantial political weight to get the ball rolling.
Andrea Johnson, a partner at the Ottawa law firm Fraser Milner Casgrain who is heading up the legal aspect of the crowdfunding lobbying efforts at CATA and i-CANADA, has also met with Ontario Securities Commission (OSC) officials to assess their support level for the cause.
“I thought it was a very productive meeting. The OSC is responsible for enforcing securities legislation in Ontario but ultimately it's the provincial legislature in Ontario that's responsible for the type of legislative change needed to make crowdfunding (legal) in Ontario,”Johnson told IT Business.ca in an interview earlier this month.
Fears startups will fly south
“Politicians do ask for guidance from regulators on how laws should be drafted and what's really manageable,” Johnson said during that interview. “So I do think it's important for the securities regulators to be informed and for political leaders to make sure they're relying on the securities regulators to be informed.”
An online petition launched just over a week ago by CATA and i-CANADA to drum up support for crowdfunding legalization has resulted in“hundreds” of signatures so far, CATA president and CEO John Reid told the webinar. CATA and i-CANADA have joined forces with various organizations, companies and academic institutions to form an umbrella group called Invest Crowdfund Canada (ICC).
CATA also sent an open letter
to industry minister Christian Paradis calling for federal support on the issue.
Crowdfunding involves raising money over social media channels. The U.S. government recently legalized equity or investment crowdfunding, which allows companies -- especially startups-- to solicit equity investment in their firms using social networking sites. In Canada, the only form of crowdfunding that's legal involves charitable causes or non-equity donations where givers can contribute money but not in exchange for profits or an ownership stake in a company.
Now that crowdfunding is legal in the U.S., groups such as CATA fear Canadian startups will fall behind their American counterparts
in accessing capital or simply move south of the border to tap into equity crowdfunding platforms there. Legalizing crowdfunding in Canada requires laws to be amended in each province because securities law falls under the jurisdiction of the provinces, not Ottawa. .