#1GAME ON Introduction to Crowdfunding 88 % THOUGHT PRESS TOMI LEIONA NCFA National Crowdfunding Association of Canada EMDA Exempt Market Dealers Association of Canada strategy VISUAL RESPONSÉ FUNCTION business strategy. Date: December 9, 2013 Prepared for: Employment and Social Development Canada Phase IV, 6D359, Gatineau, Quebec - Prepared by: Craig Asano#2Presentation Outline Introduction to Crowdfunding Part 1: Introduction to NCFA Canada Part 2: What is Crowdfunding? Part 3: Benefits and Challenges • Part 4: Industry Overview Part 5: Regulatory and Market Overview Part 6: Questions and Answers Part 7: Appendices Slide | 2 Employment and Social Development Canada NCFA#3PART 1 Part 1: NCFA Canada Introduction Slide | 3 Employment and Social Development Canada NCFA 2#4Who is NCFA Canada? ● Slide | 4 Canada's leading Crowdfunding Industry Association Cross-Canada non-profit with a growing National membership of over 600+ industry stakeholders, SMEs and investors with a wide social media reach Broad-based representing all forms of crowdfunding Community-based, membership-driven, collaborative, transparent, inclusive and dynamic Support innovation, small businesses and entrepreneurship and advocate for a dynamic, robust, harmonious and protective Crowdfunding industry in Canada We serve industry, government, academia, small to mid-size enterprises, innovation hubs and investor communities Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#5NCFA Canada - NFP Structure Community-based Industry Partners Sponsors ■ Members Ambassadors Business associations International affiliates NCFA Not-for Profit Board of Directors * Executive Management Advisory Committees Eco-system Partners ■ Federal Government Provincial/municipal - Regional Innovation centres ■ Universities * All resources are voluntary except for executive management and any contracted services Education and Research Industry News Canadian Directory Research & Analytics Online and Offline courses Slide 5 Advocacy Media Interviews Public Relations Voice Lobbying Legal Framework Regulations Networking and Connecting Partner development Lead generation Introductions Hosted Events Ambassador Workshops Community Building Non-voting National Membership Employment and Social Development Canada Programs and Services * 2014 goals Online marketplace for discounted services Programs NCFA 00#6PART 2 Part 2: What is Crowdfunding? Slide | 6 Employment and Social Development Canada NCFA 2#7What is Crowdfunding? Definition: "Pooling of small amounts of capital from a large number of people (known as 'the crowd') using the internet and social media" Basic Models: Legally permitted Not legally permitted * Permitted in Saskatchewan and via OM Exemption in some provinces DONATION-BASED REWARD-BASED For philanthropy or sponsorship For non-monetary rewards Primary Participants: . • Industry Stakeholders: Portals, providers and enablers Fundraisers: Individuals or companies that are seeking funding . Investors: Retail or accredited Slide 7 LENDING-BASED (P2P lending, P2B lending and social lending) For financial return EQUITY-BASED (Includes revenue and profit- sharing models) For financial return Employment and Social Development Canada Shutterstock NCFA Mical Cdlurcing Association Canara#8Does Crowdfunding Work? Pebble: E-Paper Watch for iPhone and Android by Pebble Technology Home Updates 41 Backers 68,929 Comments 15,313 Palo Alto, CA Product Design Funded! This project successfully raised its funding goal on May 18, 2012. 28:56 4.08mi FACE 7:05 min/mi twelve thirty five PLAY Source: Kickstarter Campaign page Slide 8 TUE 27 68,929 backers $10,266,845 pledged of $100,000 goal 0 seconds to go Funding period Apr 11, 2012 - May 18, 2012 Rewards-based Canadian Example Employment and Social Development Canada NCFA Mical Cdlurcing Association Canara#9Key Drivers - Advancements in Technology L Highly Connected World Slide 9 Sharing Economy Moores Law Virtual Startups Maker Faire Dragon's Den Disruptive Innovation Social Enterprise Employment and Social Development Canada NCFA Mical Cdlurcing Association Canara#10Key Drivers - The Funding Gap Risk? The Brain Drain Decline in innovation, capital drain, negatively impact job creation SMEs are the backbone of the Canadian economy The Funding Gap Need capital to innovate and compete globally, yet they face HIGH BARRIERS Slide | 10 Employment and Social Development Canada NCFA Mical Cdlurcing Associatier Canara#11Donation-based Canadian Examples INVEST YYC Explore Learn Community Alberta Arts Flood Rebuild By Calgary Arts Development MULTIDISCIPLINARY Project Home Updates Comments CALGARY FLOOD 0:00 1:09 ARTS REBUILD ONWARD CALGARY Ce You Tube Signup Log In | Contact Us Search Projects 42% 0 FUNDED VOLUNTEERS $209,791 PLEDGED OF $500,000 GOAL THIS PROJECT WILL ONLY BE FUNDED IF AT LEAST SO 7 IS RAISED BY MONDAY SEP DAYS LEFT 30TH, 0:00 AM DONATE NOW Community Aide (Alberta Arts Flood Rebuild) Seeking $500,000 to rebuilt the arts sector from damaged or destroyed homes, venues, equipment and lost contracts Industry dollar-for-dollar matching incentive programs by Suncor Energy and Alberta Foundation for the Arts About the Project Suncor Energy Foundation has donated $50,000 to this campaign and will match $50,000 in individual donations. The Alberta Foundation for the Arts Share this project Camille Parent looks at a photograph of his mother, Hellen MacDonald, on May 17 at his business in Peterborough. His 85-year-old mother suffered a broken hip when she was attacked by a fellow senior resident- and was abused by staff at a long-term care facility. (Clifford Skarstedt/QMI Agency) Slide 11 Finance private citizens to affect political change St. Joseph's Fleming Long Term Care Facility, ON • Campaign to raise $25-100k to change federal laws to protect seniors from abuse in long-term care homes." Appeared on 'The Crowd funder Show' launching September 22, 2013 Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#12Social Impact Crowdfunding Examples HANDOUT PHOTO Dutch city Rotterdam Crowdfunds a Bridge • Raised $130,000 in 4 months to pay for planning, design and development • "The more you donate, the longer the bridge". Individuals and organizations sponsored planks of wood with their name on it • Civic project bringing the public and city together WaveCheck's benefits Painless Faster More accurate Can be added to standard ultrasound machines Social Impact: Breast Cancer Detect Innovation Live campaign - raised over $50,000 towards launching first clinical partner study In collaboration with regional innovation centre, MaRS, hospital clinic and a group of universities and breast cancer patients Slide 12 Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#13Peer-2-Peer Lending Portal Example Funding Circle Investors Businesses How it works Marketplace About us Blog Get a business loan on your terms. Investors Do your part to help Britain grow by funding British businesses while earning a great rate. Investors are currently earning an average of 5.7% net.* Businesses Get a fast, flexible loan, up to £1,000,000 for all requirements. Bypass the banks and have your loan funded by people across the UK. Find out more Find out more Log in Join Help Loans funded so far £182,901,540 TE Funding Circle: Online marketplace for small business loans Launched in 2010 and is backed by large VCs (i.e., Union Square Ventures) and prominent British entrepreneurs Facilitated £183 million pounds of small loans between 60,000 members Michael Kain, MD of Bramley and Gage Used by UK Government as Loan Channel Investors get an average net return of 5.7%, access to their funds and can manage risk • Borrowers get quick access and competitive rates independent from the bank Canadian P2P example HI R Funding Circle THE UK GOVERNMENT INVESTS £100M IN NON-TRADITIONAL LENDING CHANNELS, £20M OF WHICH IS GOING TO FUNDING CIRCLE £ £ £20 £ MILLION £100 MILLION • Community Lend - P2P exemptive relief order from the Ontario Securities commission Employment and Social Development Canada Slide | 13 NCFA Mical Cdlurcing Association Canara#14Canadian Equity Crowdfunding Portal Example OSVX MaRS CENTRE FOR IMPACT INVESTING Get financing for impact Whether you are a nonprofit organization or for-profit business, get access to debt or equity financing from investors seeking to invest for positive impact. See how it works! About How it Works Directory Login or Sign Up Goals: $ The SVX is registered as a Restricted Market Dealer with the Ontario Securities Commission. No securities regulatory authority has approved or expressed an opinion about the securities offered on the SVX. 12 ventures and funds 100+ investors in our network $106 million in capital demand 11 strategic collaborators • Generate positive social and environmental impacts • Build a scalable social innovation model that can operate in other provinces, states and nations MaRS Social Venture Exchange (SVX): MaRS TMX O SVX • In Sep 2013, the SVX received an exemptive order to operate as a Restricted Dealer in Ontario only. Initiative in collaboration between MaRS, TMX and SVX groups Single access point for impact ventures, funds and investors During pilot year, their goal is to register 30 issuers, 100 accredited investors, and mobilize at min $2.5 million in capital for at least 10 ventures and funds on the platform Slide | 14 Employment and Social Development Canada NCFA Mical Cdlurcing Associatier Canara#15Canadian Equity Crowdfunding Portal Example Optimize Capital Markets Where Money Meets Ideas Who We Are What We Do What is Institutional Crowdfunding? Blog Sign In Find Opportunities List an Opportunity Enter Marketplace Where Investors and Institutions discover and trade Opportunities... Private Placements Private Shares SMART MONEY + $$$ Business Expansions Project Financings Pooled Assets Hedge Funds FIND OPPORTUNITIES TO INVEST AND TRADE IN FIND INVESTORS FOR YOUR OPPORTUNITY Browse through our online marketplace of private investment opportunities which you can invest and trade in directly. We'll take care of the logistics, filling. and paperwork; Best of all, you can find opportunities for FREE. ENTER MARKETPLACE Instantly get your Opportunity in front of a ready audience of Accredited Investors and Institutions. Our Online Market facilitates anything from a Business Financing or investment opportunity! Best of all, you can list your idea for FREE. LIST AN OPPORTUNITY‣ SEE HOW OUR ONLINE MARKETPLACE WORKS Optimize Capital Markets • Launched in Sep 2009, Optimize is a marketplace where accredited investors and institutions can trade in private investment opportunities Operate in Ontario, Quebec, Alberta and BC • ECN The Exempt Capital Network Join the Network Now Member Login YOUR CONNECTION TO GLOBAL INVESTMENT Investments Liquidity Marketplace INVEST RAISE CAPITAL INVESTMENT DEALERS Review company offering documents, watch videos & presentations, request to speak with management and invest in private equity investments that interest you. Slide 15 Learn More ECN Insights About Us Blog The Exempt Capital Network • Launched in 2013, based in Calgary and in partnership with an EMD Brings together corporate issuers, exempt market accredited investors and industry professionals Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#16PART 3 Part 3: Benefits and Challenges Slide | 16 Employment and Social Development Canada NCFA 2#17Crowdfunding Benefits for Startups and SMEs . Access to a new source of capital to fill a critical funding gap Efficient, transparent, cost effective ➤ Mobilize funds to non-traditional groups (e.g., rural areas, local) Crowdfunding helps get new businesses off the ground ➤ First customer traction and pre-order sales (reduces risk) ➤ Help raise early stage funding (VC feeder system) Market driven valuations ➤ Organizational preparedness Market research and product validation Crowdsourced feedback 'intelligence' (bolsters confidence, or demands that entrepreneurs pivot their business model) The power of the crowd: social media / marketing mavens Once committed investors become avid supporters, promoters and connectors for the project Slide | 17 Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#18Crowdfunding Benefits for Investors ● • Support innovation and entrepreneurism in Canada Participation in more opportunities (96% of Canadians are non- accredited investors) Direct connection with project founders (engagement) Wide range of projects to invest in (diversification) Spread risk in a self-directed manner ➤ Choose a portal and project that suits their investment profile ➤ Organizational preparedness Standardization, tracking and transparency ➤ Technology will professionalize and streamline investor relations ➤ Standardize shareholder agreements and legal documents Direct access to other investors ➤ Angel group syndications, lead investors versus the general crowd Go beyond geographic boundaries Slide | 18 ➤ Easy access to deals Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#19Crowdfunding Challenges . ● Fraud and investor protection ➤ Crowd intelligence and due diligence ➤ Insurance Concerns of illiquid nature of crowdfunding investments Purchase risk acknowledgement ➤ Strong case to develop a secondary market Increase in business failures and investor fatigue Slide | 19 Large number of investors Can be organized into a trust (single controlling member) ➤ Streamlined communications, voting, reporting and tracking Regulations need to match equity crowdfunding models ➤In the US, SEC/FINRA slow to finalize and only recently released equity crowdfunding rules and regulations ➤ Canadian regulators are assessing the need for proposed frameworks of a specific crowdfunding exemption versus permitted under existing prospectus exemption (i.e., the OM exemption by an EMD) Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#20PART 4 Part 4: Industry Overview Slide | 20 Employment and Social Development Canada NCFA 2#21Global Funding Volume by Region (2012) NORTH AMERICA $1,606 million SOUTH AMERICA $0.8 million Total funds raised during 2012 in USD Source: Massolution Apr 2012 Slide | 21 EUROPE $945 million AFRICA $0.065 million WORLDWIDE $2.7bn ASIA $33 million Funding Volume Grew by 81% $2.7 billion in 2012 $1.5 billion in 2011 Distribution 60% North America 35% Europe 5% Other Total # of Portals OCEANIA Grew 80% $76 million 813 in Mar 2012 452 in Apr 2011 Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#22Millions of USD $ Global Funding Volume by Model (2012) 3000 2000 61.5 12.4 383.3 1169.7 Accelerating 81% y-o-y growth In 2012 Distribution Lending - $1.2b (44%) Donation - $980m (37%) 554.9 115.7 1000 Reward $383m (14%) 15.7 88.9 Equity $116m (4%) 316.5 979.3 49.9 675.7 460.4 Fastest Growing Lending 111% 0 2010 Donation Slide | 22 2011 Equity Lending Reward 2012 Mixed others Source: Massolution Apr 2012 Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#23Average Campaign Size by Model EQUITY $190 thousand Source: Massolution Apr 2012 Slide | 23 LENDING $4.7 thousand MIXED OTHERS $4.3 thousand Total Campaigns 1.1 million worldwide North America (625k) Europe (470k) REWARD $2.3 thousand DONATIONS $1.4 thousand DONATION- REWARD MIX $2.3 thousand Total # of Portals Grew by 50% 542 portals in Apr 2011 813 portals in Mar 2012 Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#24Canadian Industry - Portal Distribution Canadian Crowdfunding Directory Distribution of Portals and Service Providers (as of Nov-20-2013) BC 18.8% Reward-based: FundRazr Fundo.co wattpad Pícatic pursuit NL Region Portal Service *Total % Tot 1.2%. MB 1.2% AB 7 2 9 10.6% AB BC 13 3 16 18.8% 10.6% QC NB 1 1 1.2% 18.8% NS 3 3 3.5% ON 30 00 8 38 44.7% QC 14 لم 2 16 18.8% NL 1 0 1 1.2% BETA sokap MB 1 0 1 1.2% NB 1.2% INVEST Total 70 15 85 100.0% NS YYC 3.5% Source: Craig Asano ON 44.7% * Includes active, beta and closed beta portals and service providers based in Canada Vibrant Growing Industry • 300%+ growth in donation/reward portals since April 2012 Several niche portals such as student scholarships, sports athletes, not-for-profits and crowdfunding research Slide | 24 Employment and Social Development Canada Equity-based via Dealer: O SVX Invest for impact Optimize Capital Markets SeedUps™ Canada NCFA Mical Cdlurcing Association Canara#25Global Crowdfunding Trends Industry . Growing eco-system ➤ Financial providers, consultants, placement agents ➤ European crowdfunding network and rise in Asia Iterative equity crowdfunding regulations (cost of capital vs need) Big data from 'investment profiles' Live Crowdfunding • Enterprise Crowdfunding Slide | 25 CSR (e.g., Microsoft's 'Chipin' student laptop program) ➤ Consumer centric (Dodge Dart CF purchase of a vehicle) ➤ Crowdsourcing input, contests (Doritos revenue share) Mainstream Crowdfunding ➤ A&E Project Startup; CNBC Crowdrules - Celebrity (Donald Trump – fund anything) Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#26Global Crowdfunding Trends Portals • • More dealer-broker models (EMDS, IIROC) Feeder systems and aggregation models Increase in niche, community and hybrid platforms Direct Crowdfunding (white label, widgets, plugins) Cross-border crowdfunding Issuers and Investors . . • · • More competitive = will need to be more prepared Accredited investor equity crowdfunding Optimize long term online strategy (engagement) Slide | 26 Predetermined entry / exit strategies Integrated funding strategies (government + CF + VC) Member-driven investor syndicates Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#27PART 5 Part 5: Regulatory and Political Overview Slide | 27 Employment and Social Development Canada NCFA 2#28Market Overview: High Demand and Activity . Slide | 28 Events and conferences are springing up across the globe Increase in the number of start-ups (i.e., Maker Faire movement) SMEs are seeking education to learn best practices for launching a successful crowdfunding campaign Licensed Dealer-Brokers are partnering with Crowdfunding platforms in the U.S. and new portal registration category created like AngelList Online investment communities are forming syndicates The largest and most successful portals are aggressively targeting to expand globally including to Canadian markets VC funds are investing in equity crowdfunding portals, such as Union Square Ventures led $7.5m in Circle Up Title II of the JOBS Act commenced on Sep 24, 2013 allowing private companies to advertise and solicit to the general public for investments provided that ultimately only accredited investors invest Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#29. • • Market Overview: Strong Political Incentives Crowdfunding is a hot topic amongst start-up, new venture, finance, technology, marketing, government and academic circles OSC has taken a leading role in engaging public discussions. Released a consultation paper in Dec 2012 and received 100+ responses, as set out in its August 2013 progress report CSA viewing Offering Memorandum exemption as Canada's equity crowdfunding exemption CSA released a blanket order that relaxed some financial reporting requirements last Dec 2012 and is reviewing OM exemption options Jun 17, 2013, OSC issued an exemptive relief order for MaRs SVX to sell securities over the internet to Ontario Al investors for 'social impact' deals in Ontario only ($25-50k/year cap) - relief from Suitability Jul 9, 2013, FCAA in Saskatchewan issued a new proposal for comment, which has been called 'Crowdfunding lite' Canadian deal flow is going South to raise capital on US rewards-based portals such as Indiegogo and Kickstarter and equity portals such as AngelList Slide | 29 Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#30Canadian Crowdfunding Regulations OSC Exempt Market Staff Reference Consultation Paper 45- Notice Date Issued Status Jurisdiction Cap per year Restrictions 710 Dec 2012 Proposal Ontario < $1.5 million CSA Multilateral Blanket Order 45-311 to OM - Exemption| from certain financial statements Dec 2012 In effect Canadian Securities Administration Excludes reporting issuer, investment fund, mortgage or real estate entity BCSC National instrument 45- 106 Proposed exemption to assist capital raising for small businesses Feb 2013 Proposal Proposal British Columbia < $500k Excludes reporting issuer, investment fund, mortgage or real estate entity FCAA Equity Crowdfunding Proposal Jul 2013 [LIVE] Dec 6th, 2013 Saskatchewan < $150k Up to twice per year Incorp Canada Office Yes Issuer Portal and issuer site Advertising only Audited >$500k Certified <$500k $<500k Complex Securities No No No POS Disclosure Risk Ackknowledge Yes Yes Yes Yes Yes Yes per deal < $ 2,500 Investor per year Restrictions Cooling off period < $10,000 Accredited or Retail < $2,000 < $2,000 Accredited Accredited or Retail 2 days Portals Registered Registered Registered (See Appendices: 1-4 for more details) Slide 30 Employment and Social Development Canada None Yes Yes < $ 1,500 Unlimited Accredited or Retail No investment advice Pre-notice filing No Registration NCFA Mical Cdlurcing Association Canara#31PART 6 Part 6: Questions and Answers Slide | 31 Employment and Social Development Canada NCFA 2#32Craig Asano: Contact Information NCFA National Crowdfunding Association of Canada Craig Asano Executive Director 1 Yonge Street, Suite 1801, Toronto, Ontario, M5E 1W7 +1416.618.0254 [email protected] www.ncfacanada.org Craig Asano is the Founder and Executive Chair of the National Crowdfunding Association of Canada (NCFA Canada), a cross-Canada non-profit with the mandate to provide education, advocacy and networking opportunities in the emerging Crowdfunding industry. Craig has 15 years. of experience as a marketing strategist, software technologist and start-up entrepreneur in technology, finance, manufacturing and real estate sectors. He is actively involved in developing the Canadian Crowdfunding industry at a grass-roots level connecting with industry stakeholders, leaders and key participants across the country. He regularly participates at crowdfunding events and has spearheaded multiple programs and initiatives including Canada's largest Crowdfunding Directory, a National Ambassadors outreach program, and NCFA Canada's advocacy efforts to advance equity-based Crowdfunding regulations in Canada. Slide | 32 Employment and Social Development Canada NCFA#33Brian Koscak: Contact Information сь CASSELS BROCK LAWYERS EMDA Exempt Market Dealers Association of Canada Brian Koscak Partner, Cassels Brock & Blackwell LLP [email protected] (416) 860 2955 Cassels Brock & Blackwell LLP Suite 2100, Scotia Plaza 40 King Street West Toronto, ON Canada M5H 3C2 Tel: 416 869 5300 Fax: 416 350 8877 Slide | 33 Suite 2200, HSBC Building 885 West Georgia Street Vancouver, BC Canada V6C 3E8 Tel: 604 691 6100 Fax: 604 691 6120 Brian Koscak is a Partner at the law firm of Cassels Brock & Blackwell LLP located in Toronto, Ontario and practices in the area of corporate and securities law. Brian is the Chairman of the Exempt Market Dealers Association of Canada, a national non-for-profit organization representing exempt market dealers, issuers and compliance professionals across Canada. Brian is also a member of the Ontario Securities Commission's Exempt Market Advisory Committee which is considering new ways to raise capital in Ontario, including through equity crowdfunding. Brian is actively involved in developing a viable Crowdfunding framework for Canada. He has spoken at numerous Crowdfunding conferences, events and webinars, met with securities regulators across Canada to discuss the many aspects of Crowdfunding and is actively engaged with clients in the space and more generally with the prospectus and registration issues involving selling securities over the internet. Employment and Social Development Canada NCFA#34PART 7 Part 7: Appendices Slide | 34 Employment and Social Development Canada NCFA 2#35Appendix 1: OSC Exempt Market Review Dec 2012: OSC Staff Consultation Paper 45-710 • • $1.5 million in any 12 month period $2.5k in any single deal up to $10k in any 12 month period Incorporated in Canada and head office located in Canada Advertising restriction to only the portal and issuer's website Not available to investment funds or complex securities Investors can only re-sell securities under existing prospectus exemptions; they are illiquid investments Sign a risk acknowledgement and 2 day cooling off period Disclosure at point of sale (financing, issuer and risk factors) Deal is <$500K mgt certified statements; >$500k audited Portal regulation unclear but will have to register (gatekeeper) Link to OSC Exempt Market Review (Consultation Paper): http://www.osc.gov.on.ca/documents/en/Securities-Category4/sn 20121214_45-710 exempt-market-review.pdf Link to NCFA Canada response: http://www.ncfacanada.org/ncfa-canada-equity-crowdfunding-principles-response-to-osc-staff-consultation-paper-45-710/ Slide | 35 Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#36Appendix 2: CSA Relief Under OM Exemption Dec 2012: Multilateral CSA Notice 45-311 Exemptions from Certain Financial Statement Requirements in the OM to Facilitate Access to Capital by Small Businesses . Issuer group cap under the Blanket Order < $500,000 Investor cap of $2,000 of all securities distributed under the blanket order in any 12 month period Issuer cannot be a reporting issuer, investment fund, mortgage investment entity or a Company engaged in the real estate business Issuer is not distributing complex securities Link to NBSC Blanket Order: http://www.ncfacanada.org/nbsc-blanket-order-with-important-changes-to-om-exemption-to-facilitate-small-business/ Slide | 36 Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#37Appendix 3: Proposed BC CF Exemption Feb 2013: National Instrument 45-106 Proposed Prospectus Exemption to Assist Capital Raising by Small Businesses • The issuer need only include unaudited financial statements prepared using private enterprise GAAP in the offering memorandum and comply with these conditions: Issuer group cap < $500,000 Investor cap of < $2,000 in any 12-month period Issuer is not a reporting issuer, investment fund, mortgage investment entity or real estate issuer Issuer cannot distribute complex securities OM contains a bold warning on the front page Link to BCSC Proposal: http://www.ncfacanada.org/national-instrument-45-106-proposed-prospectus-exemption-to-assist-capital-raising-by-small- businesses-request-for-comment/ Slide | 37 Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara#38Appendix 4: FCAA Equity Crowdfunding Exemption Approved Dec 6, 2013: FCAA Approves Equity Crowdfunding Exemption in Saskatchewan . • Investors capped at $1,500 per deal but no limit on how many investments within any 12-month period Issuers can raise up to $150,000 no more than twice per year Offering period can be no longer than six months No financial statement requirements Any type of issuer can use this exemption and issue any type of security Portals are exempt from registering with the FCCA, therefore, there are no "know your client" or "suitability" requirements Portals cannot provide investment advice Portals can charge fees but no fees are required to be paid to the FCCA Link to Saskatchewan Crowdfunding 'lite': http://www.ncfacanada.org/wp-content/uploads/2013/07/Proposal-FCAA-Crowdfunding-Exemptions-July-9-2013.pdf http://ncfacanada.org/equity-crowdfunding-available-in-saskatchewan/ Slide | 38 Employment and Social Development Canada NCFA Michal Chowdurcing Association Canara