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40 J u n e 2 0 1 4 w w w . C A N A D I A N L a w y e r m a g . c o m background checks on users, and not make recommendations or operate as a market or exchange. Some think the $1.5-million threshold could be too low, due to the legal and accounting costs faced by issuers, which can amount to $250,000, says Shara Roy, of Lenczner Slaght Royce Smith Griffin LLP. "That's quite a large cost compared to the potential upside," she says. Ted Maduri, a partner at Davis LLP, points out the lower the per-investor lim- its the higher the number of shareholders. Many startups are looking for $1 million, which under the current proposals would require 400 shareholders. Marudi there- fore urges against the addition of further disclosure requirements, or reducing the limits to try to protect investors. "To have even more checks and balance puts an unbelievable burden on these companies that are trying to raise capital. I think there are sufficient checks and balances in the system, in particular [portal] registra- tion and background checks [on issuers]." The proposal under consultation in B.C. is more financially restrictive than Ontario's, but does not require portal reg- istration and is available to non-reporting issuers only. It would only allow businesses to raise $150,000 per offering, and would limit investments to $1,500 per person. Businesses would have to provide inves- tors with a "streamlined offering docu- ment," and portals would still be subject to certain rules. For example, they would be banned from giving investment advice and would have to require investors to confirm they had read and understood the issuer's document and risk warnings. Alberta is yet to release any proposals and is taking a "wait-and-see" approach, says Marek Lorenc, of Davis LLP's Calgary office. This may be simply due to a lack of demand. "There's a growing number of startups in Alberta, but the demand for the exemptions is really driven by Ontario. There's quite a strong startup community, a lot of small and medium enterprises, operating there," he says. The uniquely disparate nature of Canada's provincially organized securities regime could create problems for busi- nesses planning to use these new regula- tions. Many startups will be regionally based, but the appeal of crowdfunding is premised on reaching out to as many people as possible. The prospect of having different rules across the country "limits the appeal of the exemptions," says Lor- enc. "If you're restricting those who can invest based on their provinces, you're splitting up the potential investments that these companies can receive." Given Canada's population distri- bution, perhaps companies will simply choose to comply with Ontario's require- ments, regardless of where they are based. Roy says it will be interesting to see where investors are coming from, and "whether companies will need to meet the Ontar- io requirements in order to raise more money, or whether they will gravitate towards their own regulator." Keeping the bar high on disclosures lEgal rEport/seCuRiTies lAw Expertise matters here Mergers and acquisitions are no easy task. Through our dedicated deal-specific teams, we work to ensure that your transaction achieves the greatest success. Guiding you through our step-by-step approach we can help you overcome the challenges in your way. We are proud to have worked on over 270 deals with a total value of CAD $44.3 billion, in the last 12 months combined. Enjoy the peace of mind that comes from working with industry leaders in corporate actions and shareholder communications. Contact us today. ntitled-3 1 14-05-16 12:34 PM

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