Multilateral CSA Notice

Transcription

1 Multilateral CSA Notice Start-up Crowdfunding Registration and Prospectus Exemptions May 14, 2015 Introduction The securities regulatory authorities (the participating regulators or we) of British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia (the participating jurisdictions) are adopting substantially harmonized registration and prospectus exemptions (together, the start-up crowdfunding exemptions) that allows start-up and early stage companies to raise capital in these jurisdictions, subject to certain conditions. The participating regulators have implemented, or expect to implement, the start-up crowdfunding exemptions by way of local blanket orders (the start-up crowdfunding exemption orders). The start-up crowdfunding exemptions will be effective in each participating jurisdiction concurrently with, or as soon as possible after, the publication of this notice. Each startup crowdfunding exemption order is or will shortly be available on the website of the respective securities regulatory authority of the participating jurisdiction. Substance of the start-up crowdfunding exemptions The start-up crowdfunding exemptions are comprised of an exemption from the prospectus requirement (the start-up prospectus exemption) and an exemption from the dealer registration requirement (the start-up registration exemption). The start-up prospectus exemption permits non-reporting issuers to issue eligible securities, subject to a number of conditions. The key conditions are: the head office of the issuer is located in a participating jurisdiction; the issuer distributes eligible securities of its own issue through an online funding portal; the issuer distributes eligible securities using an offering document in the form required that is made available through the online funding portal. The offering document includes basic information about the issuer, its management and the distribution, including how the issuer intends to use the funds raised and the minimum offering amount;

2 the issuer group cannot raise aggregate funds of more than $250,000 per distribution and is restricted to not more than two start-up crowdfunding distributions in a calendar year; no person invests more than $1,500 per distribution; the distribution may remain open to up to a maximum of 90 days the distribution must be made through a funding portal that is either relying on the start-up registration exemption or is operated by a registered dealer. Registered dealers that operate funding portals must meet their existing registration obligations under securities legislation and confirm to issuers that they meet or will meet certain conditions provided in the start-up registration exemption; the issuer provides each purchaser with a contractual right to withdraw their offer to purchase securities within 48 hours of the purchaser s subscription or notification to the purchaser that the offering document has been amended; and none of the promoters, directors, officers and control persons (collectively, the principals) of the issuer group is a principal of the funding portal. The eligible securities are subject to an indefinite hold period and can only be resold under another prospectus exemption, under a prospectus or four months after the issuer becomes a reporting issuer. The start-up registration exemption permits funding portals to facilitate distributions under the start-up crowdfunding exemptions, subject to a number of conditions. The key conditions are: the funding portal must deliver a funding portal information form and individual information forms for each of its principals to the participating regulators at least 30 days prior to facilitating its first start-up crowdfunding distribution; the head office of the funding portal is located in Canada; the majority of the funding portal s directors are Canadian residents; the funding portal does not provide advice to a purchaser or otherwise recommend or represent that an eligible security is suitable, or about the merits of the investment; the funding portal does not receive a commission, fee or any other amount from a purchaser of eligible securities;

3 the funding portal makes the offering document of the issuer and the risk warnings available online to purchasers and does not allow a subscription until the purchasers have confirmed that they have read and understood these documents; the funding portal receives payment for an eligible security electronically through the funding portal s website; the funding portal holds the purchasers assets separate and apart from its own property, in trust for the purchasers and, in the case of cash, at a Canadian financial institution; the funding portal maintains books and records at its head office to accurately record its financial affairs and client transactions, and to demonstrate the extent of the funding portal s compliance with the start-up crowdfunding exemption orders for a period of eight years from the date a record is created; the funding portal either o releases funds to the issuer after the minimum offering amount has been reached and provided that the 48-hour right of withdrawal has elapsed, or o returns the funds to purchasers if the minimum offering amount is not reached or if the start-up crowdfunding distribution is withdrawn by the issuer; and a participating regulator has not notified the funding portal that it cannot rely on the start-up registration exemption because its principals or their past conduct demonstrate a lack of integrity, financial responsibility or relevant knowledge or expertise. The start-up exemption orders will expire on May 13, Background In a relatively short period of time, crowdfunding has become an important new method of raising capital through the internet for a broad range of purposes. It has been used to raise money for specific projects that do not generally involve the issuance of securities. However, in some foreign jurisdictions, equity crowdfunding is emerging as a way for businesses, particularly start-ups and small issuers, to raise capital. A crowdfunding exemption has existed in Saskatchewan since December 2013 (General Order Saskatchewan Equity Crowdfunding Exemption). As a participating regulator, the Financial and Consumer Affairs Authority of Saskatchewan will adopt the start-up crowdfunding exemptions and repeal its current exemption in order to harmonize with other participating regulators. The current Saskatchewan exemption will not be repealed if there are distributions open under that exemption. We think that crowdfunding can be a viable method for start-ups and small issuers to

4 raise capital. Consequently, on March 20, 2014, the securities regulatory authorities of Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia published for comment two different crowdfunding exemptions (the 2014 proposal): the integrated crowdfunding prospectus exemption and crowdfunding portal requirements proposed under Regulation respecting Crowdfunding (the crowdfunding exemption); and the start-up crowdfunding exemptions. Although the British Columbia Securities Commission did not participate in the 2014 proposal, it published a local notice, BC Notice 2014/03 Notice and Request for Comment on Start-Up Crowdfunding, soliciting comment on the start-up crowdfunding exemptions. The crowdfunding exemption would be available to reporting issuers and nonreporting issuers and provide a higher offering limit. The participating regulators that have published the 2014 proposal continue to work closely with the Ontario Securities Commission in developing the proposals relating to the crowdfunding exemption. The start-up crowdfunding exemptions are intended to provide an alternative source of capital to non-reporting issuers at an earlier stage of development. The participating regulators that have published the 2014 proposal have conceived both exemptions to coexist and be complementary. Based on the feedback received from market participants, the participating regulators are adopting start-up crowdfunding exemption orders containing substantially harmonized terms and conditions for a period of five years. Issuers will be able to conduct a start-up crowdfunding distribution under the start-up crowdfunding exemptions simultaneously in all of the participating jurisdictions as well as any other jurisdictions of Canada that may adopt the start-up crowdfunding exemptions in the future. Summary of the comments received The comment period on the 2014 proposal ended on June 18, During that period, we received 26 written submissions in response to the 2014 proposal, 13 of which specifically discussed the start-up crowdfunding exemptions. We thank everyone who provided comments. A list of the names of the commenters on the start-up crowdfunding exemptions and a summary of the comments received on the start-up crowdfunding exemptions, together with Staff responses, are provided in Appendices A and B of this Notice. Summary of changes to the start-up crowdfunding exemption orders After considering the comments, we made some revisions to the start-up crowdfunding exemptions in the 2014 proposal. Those revisions are reflected in the form of the start-up

5 crowdfunding exemption orders. The key changes we have made to the start-up crowdfunding exemptions in the 2014 proposal are described in Appendix C. Questions Please refer your questions to any of the following: British Columbia Elliott Mak Senior Legal Counsel, Corporate Finance British Columbia Securities Commission (604) Saskatchewan Liz Kutarna Deputy Director, Capital Markets Securities Division Financial and Consumer Affairs Authority of Saskatchewan (306) Denis Silva Senior Legal Counsel, Capital Markets Regulation British Columbia Securities Commission (604) Mikale White Legal Counsel Securities Division Financial and Consumer Affairs Authority of Saskatchewan (306) Manitoba Chris Besko Director, General Counsel The Manitoba Securities Commission (204) Québec Gabriel Araish Senior Analyst, Corporate Finance Autorité des marchés financiers , ext New Brunswick Susan Powell Deputy Director, Securities Division Financial and Consumer Services Commission Marc-Olivier St-Jacques Analyst, Corporate Finance Autorité des marchés financiers , ext Nova Scotia Abel Lazarus Securities Analyst Nova Scotia Securities Commission

6 Appendix A List of commenters Canadian Advocacy Council for Canadian CFA Institute Societies (CFA) Canadian Foundation for Advancement of Investor Rights (FAIR) Equity Crowdfunding Alliance of Canada (ECFA) Fonds de solidarité FTQ Invest Crowdfund Québec National Crowdfunding Association of Canada (NCFA) Optimize Capital Markets Private Capital Markets Association (PCMA) Prospectors & Developers Association of Canada (PDAC) Stewart McKelvey The Bay Wind Field Inc. TMX Group Tripp Business Law

7 Appendix B Summary of comments The start-up crowdfunding exemption was published for comment simultaneously with draft Regulation respecting Crowdfunding in Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia in the 2014 proposal. The British Columbia Securities Commission (BCSC) requested comments from its market participants on the start-up crowdfunding exemption separately in a local notice, BC Notice 2014/03 Notice and Request for Comment on Start-Up Crowdfunding. Comments received by the BCSC are not included in this appendix. The following is a summary of the 13 comment letters that specifically discuss the start-up crowdfunding exemption received in response to the 2014 proposal. TOPIC NATURE OF COMMENTS RESPONSES Support for the start-up crowdfunding exemption Harmonization allowing funding portals established in any participating jurisdiction to accept issuers and investors established in any participating jurisdiction. Out of 13 comment letters specifically discussing the start-up crowdfunding exemption, 12 expressed general support for startup crowdfunding exemption. One commenter specifically expressed its strong opposition to the start-up crowdfunding exemption, citing various issues. All commenters agreed with the approach of allowing issuers to access investors in more than one Canadian jurisdiction. One commenter stated that even slight differences between jurisdictions are likely to increase compliance challenges, costs and confusion for companies who wish to use the exemption in more than one province or territory. One commenter was of the view that given the proposed individual investment limits, it will be important for issuers to be able to access investors in more than one Canadian jurisdiction. One commenter indicated that the start-up crowdfunding exemption should not be restricted to participating jurisdictions. One commenter stated that harmonization will encourage a healthy marketplace. One commenter believed that by allowing investors to invest across jurisdictions, we reduce the costs associated with regulatory fragmentation and improve efficiency in capital allocation. We thank the commenters for their support. We thank the commenters for their comments. We think that the viability of the start-up crowdfunding exemption is contingent on a substantial effort of harmonization between the participating jurisdictions. Support for absence of One commenter indicated that it would add an unnecessary layer We thank the commenters for their 1

8 TOPIC NATURE OF COMMENTS RESPONSES registration requirements of complexity. Also, funding portals are becoming more comments. sophisticated in terms of security measures and the intelligence of the crowd contributes to a high degree of integrity. One commenter was of the view that it could potentially compromise the success of start-ups. One commenter believed that registration is not required to protect investors. The same commenter stated that there has been less than 0.01% of fraud in the marketplace, there are no reported frauds on the equity crowdfunding platforms operating outside of Canada and founders of a portal have high incentives to make their business a success. One commenter believed that funding portals will utilize best practices. Therefore, innovation should be encouraged. One commenter believed that the registration of the funding portal adds expenditure and inefficiency to the system. Against the absence of registration requirements One commenter believed that registration would be useful way for regulators to monitor who is administering funding portals, creating additional transparency and accountability. One commenter indicated that the difference between $2,500 and $1,500 does not justify the absence of registration. One commenter believed that unregulated funding portals would be a complete abandonment of Canadian securities regulators investor protection missions. Adequate oversight and compliance are needed to ensure that small and medium enterprises use a legitimate intermediary. One commenter was of the view that if the exemption was to be adopted, investors may not exercise sufficient diligence with respect to a particular investment, mistakenly believing that if the investment is permitted by the regulators, it must be safe. Therefore, strict monitoring and enforcement of transgressions would be extremely important. One commenter believed that funding portals should be expected to minimize misconduct by having record keeping requirements relating to securities issued and investors, have conflict of interest requirements, have regulatory responsibility for ensuring integrity of issuers and have robust information requirements (i.e. financial condition data). We think that costs associated with the use of the start-up crowdfunding exemption must be kept as low as possible for funding portals and issuers for the exemption to be a viable alternative source of capital for start-ups and issuers at a very early stage of development. Imposing funding portal registration requirements may affect the viability of the start-up crowdfunding exemption and the costs of registration may outweigh the added benefits. There are a number of conditions imposed in the start-up crowdfunding exemption that mitigate the risk associated with non-registered funding portals. We note that securities regulatory authorities have the power to inspect and investigate unregistered funding portals using the start-up registration 2

9 TOPIC NATURE OF COMMENTS RESPONSES One commenter believed that some minimum oversight is needed. One commenter was of the view that an unregistered funding portal would have no liability in the event of fraud, and that it increases the potential for loss of trust, thus unfairly impacting registered and non-registered funding portals. One commenter indicated that non-equity rewards-based crowdfunding portals will be actively involved in equity crowdfunding under the start-up crowdfunding exemption. The public will be confused when an unregulated non-equity funding portal is involved in equity crowdfunding. Also, an unregistered funding portal is contrary to the business trigger test which would ordinarily require registration under applicable securities law and investors may incorrectly assume a regulator s review of an issuer s offering document and background checks will be interpreted as having approved an offering. Offering limit limit per calendar year of 2 distributions by an issuer of a maximum amount of $150,000 under the exemption ($300,000 per year). Four commenters thought the proposed offering limit is appropriate. However, one of them suggested that the limit should be adjusted for inflation annually based on the rate of inflation. Five commenters thought the offering limit should be higher: One commenter suggested a ceiling of $1.5 million per year. One commenter suggested a ceiling of $500,000 per year per issuer (with a maximum of two $250,000 distributions) because it would allow the issuer to operate without having to worry about its next financing round. One commenter proposed two capital raises around $500,000 to $750,000 each with a maximum annual cap of $1 million per year. The commenter also wondered if two distributions of equal amounts is the best method, questioning the possibility to implement milestones in the distribution. One commenter believed that the $150,000 limit per offer is appropriate but that the limit on the number of raises per calendar year is not. Therefore, the commenter proposed to limit the maximum amount of capital that can be raised under the exemption during the lifetime of an issuer to a exemption. Enforcement action may be taken if necessary. Registered dealers may operate funding portals to facilitate start-up crowdfunding distributions, provided that they comply with their obligations under securities legislation when operating funding portals as well as some conditions of the start-up crowdfunding exemption. We have increased the offering limit to $250,000 ($500,000 per year) from the $150,000 provided in the 2014 proposal. We think this limit will better address the funding needs of issuers at a very early stage of development, while remaining an appropriate purchaser protection safeguard. 3

10 TOPIC NATURE OF COMMENTS RESPONSES maximum of $500,000. In other words, once the $500,000 limit is reached, an issuer can no longer rely on the exemption. One commenter was of the view that safety measures should focus on the registration requirements, due diligence and experience within the financial industry rather than limiting the amount raised. Limit of $1,500 per investor per distribution Absence of aggregate annual investment limit per investor Five commenters thought the limit for a single investment is appropriate. Among these five commenters, one commenter believed that limiting the amount a retail investor can invest makes sense as it relates to this new asset category. Five commenters were of the view that the single investment limit should be higher: Three commenters suggested a $2,500 investment limit. One commenter suggested a $5,000 to $10,000 investment limit. One commenter suggested a $20,000 investment limit. One commenter indicated that the relatively low limit will result in a heavy burden for the issuer concerning his relation with investors. One commenter suggested an investment limit of $250 per distribution. Nine commenters thought there should be a limit on the aggregate annual investment: One commenter was of the view that it would be in line with the policy rationale underlying the Crowdfunding Exemption individual annual investment limits. One commenter stated that nothing in the proposed exemption would prevent an unsophisticated investor from investing all of their financial assets in a number of issuers through the start-up crowdfunding exemption. Others suggested specific limits: $5,000 to $10,000 $20,000 $15,000 adjusted for inflation We think that the $1,500 investment limit is an adequate limit as it provides appropriate purchaser protection safeguard, particularly given the fact that there may be a great number of unsophisticated purchasers that will invest in startups and issuers at a very early stage of development. Given the low investment limits of the start-up crowdfunding exemption, that the purchasers will be warned of the risk of the investment and will have to complete a risk acknowledgement form prior to investing, we do not think that an aggregate annual investment limit is necessary. The annual investment limit could be re-visited in the future if it becomes an issue. 4

11 TOPIC NATURE OF COMMENTS RESPONSES $6,000 $2,000 Around $10,000 Applicability of investment limits to accredited investors Support for absence of formal ongoing disclosure requirements Against the absence of formal ongoing disclosure requirements Five commenters thought accredited investors should be permitted to invest higher amounts. One commenter believed we should follow the U.S developing norms. Two commenters suggested that if we decided to increase the limit for accredited investors, the MaRS VX exemptive relief order would be reasonable. Three commenters thought there should not be ongoing disclosure. Seven commenters indicated that issuers should provide some form of periodical updates of their activities. Two commenters suggested that issuers should maintain securities registers on the funding portal s website or on their website. The start-up crowdfunding exemption will impose an investment limit of $1,500 per distribution. The accredited investor exemption is separately available to those investors who wish to invest higher amounts. We thank the commenters for their comments. Purchasers will have to read and accept a risk acknowledgement form clearly warning them that they will not be provided with any ongoing information. Ongoing disclosure requirements may discourage start-ups and issuers at a very early stage of development from using the start-up crowdfunding exemption. We encourage issuers to communicate with their security holders despite the absence of formal ongoing disclosure requirements. Such communication may assist in future fundraising by the issuer. Corporate laws apply and investors may have the right to request information from issuers under these laws. Support for absence of Six commenters believed that there should not be an ongoing We thank the commenters for their 5

12 TOPIC NATURE OF COMMENTS RESPONSES requirement to update the offering document outside the distribution period obligation to update the offering document forms outside of the distribution period. comments. Against the absence of requirement to update the offering document outside the distribution period Support for the introduction of a cooling-off period Against the introduction of a cooling-off period Four commenters believed that there should be an ongoing obligation to update the offering document forms outside of the distribution period. One commenter believed that investors need to be kept abreast of any material changes and therefore issuers need to update this information during and after the distribution period. One commenter suggested that the documents be updated once annually and distributed to all security holders at the anniversary of the incorporation or at the annual security holders meeting. Four commenters thought a two-day cooling-off requirement is appropriate. One commenter was of the view that a 10 day cooling-off requirement would be better but the right of withdrawal should be exercised 20 days prior to the closing of the distribution. During this 20-day period, no withdrawal right should be allowed. One commenter suggested that it should be 5 business days. One commenter proposed a two-business day right of withdrawal from the date of the initial investment decision as long as that investment is made 96 hours prior to the closing of the distribution. The commenter was of the view that our proposed withdrawal period is not feasible in an all or nothing campaign unless a subscription waitlist is permitted. The commenter argues that it would be challenging for issuers to replace investors exercising their right of withdrawal considering the short time frame to do so. Two commenters were of the view that investors should have a two-day withdrawal right after they commit to an investment, arguing that our proposal would allow issuers to ask friendly investors to invest and, thereafter, withdraw prior to the deadline with the only intention to create an appearance of a successful campaign. We encourage issuers to communicate with their security holders despite the absence of formal ongoing disclosure requirements. Such communication may assist in future fundraising by the issuer Corporate laws apply and investors may have the right to request information from issuers under these laws. We thank the commenters for their comments. We think that purchasers should have the right to withdraw their investment within 48 hours of the subscription, not within 48 hours of the closing of the distribution. If the purchaser had the right to withdraw their subscription at least 48 hours prior to the closing of the distribution, then this may provide an incentive for issuers to inflate their offerings with early investments from relatives who would then, prior to the closing, withdraw their investments. Therefore, the right to withdraw their investment within at least 48 hours of the subscription eliminates the possibility for an issuer to artificially create a successful campaign. We also think that since the offering 6

13 TOPIC NATURE OF COMMENTS RESPONSES document may be amended during the distribution period, purchasers should have the right to withdraw their investment within 48 hours of the funding portal notifying them that the offering document has been amended. For Nova Scotia only CEDIF s eligibility to use the start-up crowdfunding exemption Handling of investor funds by funding portals Four commenters were of the view that Community Economic Development Investment Funds should be eligible to use Regulation One commenter indicated that many lawyers may be unwilling to serve as an accepted depository. Staff of the Nova Scotia Securities Commission (NSSC) thanks the commenters for their comments. Staff of the NSSC will be reviewing the CEDC Regulations to assess what changes are required to accommodate CEDIFs wanting to use the crowdfunding exemptions. We acknowledge the comment and have amended the start-up crowdfunding exemption order so that funding portals be permitted to hold or handle investor funds, subject to conditions. Funding portals handling purchaser s assets will have to hold them separate and apart from their own property, in trust for the purchaser, and, in the case of cash, in a designated trust account at a Canadian financial institution. Funding portal s head office requirement One commenter was of the view that funding portals should not be required to have a head office in a participating jurisdiction. We thank the commenter for its comment. We have amended the start-up crowdfunding exemption order so that funding portals relying on the start-up registration exemption have their head office located in Canada rather than only in a participating jurisdiction. 7

14 TOPIC NATURE OF COMMENTS RESPONSES Funding portal s promoters, directors, officers and control persons residency requirements One commenter indicated that funding portals should not be required to have Canadian resident directors, promoters, officers and control persons. We thank the commenter for its comment. We have amended the start-up crowdfunding exemption order to require that the majority of the funding portal s directors be resident of Canada for those funding portals relying on the start-up registration exemption. The adjustment should give funding portals enough latitude to recruit qualified managers while maintaining a strong presence of the Exclusion of investment funds Financial statements requirements Two commenters thought the exclusion of investment funds from the exemption is not appropriate. One commenter was of the view that an investment in an entity which would, in turn, invest in issuers that would otherwise, on their own, qualify for investment under the start-up crowdfunding exemption should be permitted. The commenter expressed the view that such entity would allow risk-diversification for investors and mentorship for the issuers. One commenter indicated that some investment funds have channeled funds to operating companies to allow them to proceed with their operations and believes they should be included. Four commenters thought that issuers should produce financial statements, although the commenters thought financial statements should not be audited. management team in Canada. We thank the commenters for their comments. We think that the startup crowdfunding exemption is intended for start-ups and issuers at a very early stage of development. The scope of the regime does not apply to investment funds. We thank the commenters. However, we think that costs associated with the use of the startup crowdfunding exemption must be kept as low as possible for the exemption to be a viable alternative source of capital for start-ups and issuers at a very early stage of development. A requirement to produce financial statements may be too costly for this type of issuers. 8

15 TOPIC NATURE OF COMMENTS RESPONSES We note that issuers may be required to prepare financial statements under corporate laws or for other purposes. Permitted communication One commenter was of the view that funding portals should provide guidance on permitted communication between issuers, investors, and potential investors. One commenter thought funding portals should be required to provide forums of discussion after the finalization of fundraises, stressing the fact that failing to do so would increase risks of fraud. Risk Acknowledgement Form One commenter believed the Important Risk Warnings is sufficient to protect investors. One commenter believed that the language used in the Important Risk Warnings should, to some extent, be modified because: (i) It does not emphasize enough on the fact that the money may never be available to them; (ii) It should cover the lack of continuous disclosure materials; (iii) It should explain some of the investor s rights in plain language; (iv) It should emphasize the benefits of speaking to a qualified financial advisor. One commenter indicated that the Important Risk Warnings does not adequately assist investors for a number of reasons: the risk warnings do not include references or explanations of the risks associated with investments in start-ups and issuers at a very early stage of development; the following extract is confusing: I understand that I have not received any advice... ; Specific information should be provided about the difference between the rights attached to a prospectus-qualified investment and an exempt distribution. The same commenter believed regulators should test any risk acknowledgement form. We thank the commenters for their comments, but have not added guidance or requirements with respect to funding portal communication. We encourage issuers to communicate with their security holders despite the absence of formal communication requirements. Such communication may assist in future fundraising by the issuer. In response to these comments, we replaced Schedule A Important Risk Warnings with a new risk acknowledgement form to better reflect the risks associated with investing in start-ups and issuers at a very early stage of development. The risks warnings are expressed in plain language. The risk acknowledgement form requires an active confirmation from purchasers. 9

16 TOPIC NATURE OF COMMENTS RESPONSES Concerns with the wording of the proposed instrument One commenter expressed concerns regarding the wording of the Draft Blanket Order. The commenter stated he would have difficulty advising clients and recommended amendments to certain definitions. We thank the commenter for its comments. 10

17 Appendix C Summary of changes to the start-up crowdfunding exemption orders We provide below a summary of the key changes that have been made to the start-up crowdfunding exemption orders published in the 2014 proposal. Definitions We have amended certain definitions, such as the following: we have modified the definition of issuer group so it includes the issuer, an affiliate of the issuer, and any other issuer that is engaged in a common enterprise with the issuer or with an affiliate of the issuer, or whose business is founded or organized, directly or indirectly, by the same person who founded or organized the issuer; and the list of participating jurisdictions was amended to include British Columbia and any other jurisdiction with a corresponding start-up crowdfunding exemption order. We have added certain definitions for ease of reading of the conditions set out in the start-up crowdfunding exemption orders; Offering limits We have increased the offering limit from $150,000 to $250,000 twice per calendar year. We think this limit will better address the funding needs of issuers at an early stage of development, while remaining an appropriate investor protection safeguard. We have also clarified that this is an aggregate limit that applies to a start-up crowdfunding distribution made in all participating jurisdictions. Funding portals head office and residence conditions for directors, officers, promoters and control persons We have revised the funding portal head office location condition so that a funding portal located in a jurisdiction of Canada that is not a participating jurisdiction may use the start-up registration exemption. A funding portal located in a non-participating jurisdiction that intends to use the start-up registration exemption in a participating jurisdiction should consider whether it is subject to the registration requirement under the securities legislation of its local jurisdiction. Previously, funding portals promoters, directors, officers and control persons were required to be residents of Canada. We have amended this condition to require that the majority of the funding portal s directors be resident of Canada. We expect that this

18 condition to give funding portals sufficient latitude to recruit qualified individuals, while maintaining a strong management presence in Canada. 48-hour right to withdraw investment Following the comments received, we have amended the start-up crowdfunding exemption orders to provide a right of withdrawal to purchasers that can be exercised within 48 hours of a subscription or after the purchaser is notified by the funding portal of any amendment to an offering document. Issuers are required to amend their offering document if it is no longer true before the end of a distribution period. Handling of purchaser s funds by funding portals We have revised the conditions applicable to handling of purchaser funds by funding portals during a start-up crowdfunding distribution. We think that the cost associated with funding portals retaining the services of an accepted depository may be too onerous given the relatively low offering limits under the start-up prospectus exemption and the fact that start-up crowdfunding distributions involve a high number of purchasers. We have amended the start-up registration exemption to allow funding portals to hold purchasers funds, provided that the funds are segregated and held in trust for purchasers in a designated trust account at a Canadian financial institution. We have amended the start-up registration exemption to clarify that the funding portals are to release funds to the issuer only after the minimum offering amount has been reached and the 48-hour right to withdraw has elapsed. If the minimum offering amount is not reached or the offering has been withdrawn by the issuer, funding portals are required to return all funds to purchasers no later than five business days after the end of the distribution period or withdrawal of the distribution. Consequently, we have amended the start-up registration exemption to remove the trust agreement delivery condition. Books and record of funding portals We have added the condition for a funding portal relying on the start-up registration exemption to maintain books and records at its head office to accurately record its financial affairs and client transactions, and to demonstrate the extent of the funding portal s compliance with the start-up registration exemption for a period of eight years from the date a record is created. Funding portals operated by registered dealers We have amended the start-up crowdfunding exemption orders to allow registered dealers to operate funding portals. Registered dealers must still comply with their existing obligations under securities legislation when operating funding portals. An issuer using the start-up prospectus exemption and using a funding portal operated by a registered dealer must receive a confirmation from the registered dealer that it will meet certain conditions provided under the start-up registration exemption.

19 Issuer information form and issuer individual form We have removed the condition to file an issuer information form to avoid duplication of information and simplify the process for issuers. We have amended other forms to incorporate information that previously required in the issuer information form under the 2014 proposal. Also, we have removed the condition to file issuer individual forms to ensure consistency with delivery or filing requirements associated with other statutory prospectus exemptions. Offering document We have amended the offering document to include additional background information about the issuer s directors, officers, promoters and control persons. We have made other changes to the offering document to ensure that the information is clearer. Risk acknowledgement form We have made several changes to the risk acknowledgement form for ease of reading and to ensure that the information is clearer. Filing or delivery of offering document and issuer access agreement We have amended the deadline for issuers to file the offering document to 30 days after the closing of the distribution. Also, we have removed the condition to deliver the issuer access agreement. These changes were made to ensure consistency with delivery or filing requirements associated with other statutory prospectus exemptions. Funding portal disclosure of contact information We have added a condition for funding portals relying on the start-up registration exemption to disclose online the name and business contact information of their officers, directors, promoters and control persons. Availability of the registration exemption We have added a condition that allows securities regulatory authorities to notify funding portals that they cannot rely on the start-up registration exemption because their principals or their past conduct demonstrate a lack of integrity, financial responsibility or relevant knowledge or expertise. We think this will provide an investor protection safeguard.

20 DECISION NO PDG-0077 (Translation) Blanket Order on Start-up Crowdfunding Prospectus and Registration Exemptions In view of the importance of equity crowdfunding as a new on-line method of raising capital; Whereas start-ups and other small businesses have more limited access to funding; In view of the work carried out by the Autorité des marchés financiers (the Authority ) and other Canadian securities administrators for the purpose of co-ordinating their efforts to find an alternative source of funding for start-ups and other small businesses; In view of the notice of publication and request for comment on the draft Blanket Order in Québec on the Start-up Crowdfunding Prospectus and Registration Exemption published on March 20, 2014 in the Bulletin of the Authority [(2014) vol. 11, no. 11, section 6.2, p. 732] as well as the favourable comments received from financial sector stakeholders further to the notice of publication and request for comment; In view of the need to grant certain issuers an exemption from the prospectus requirement set out in sections 11 and 12 of the Securities Act, CQLR, c. V-1.1 (the Act ) and the need to grant certain funding portals an exemption from the dealer registration requirement set out in section 148 of the Act, subject to certain conditions; In view of the terms defined in the Act, Regulation respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations, CQLR, c. V-1.1, r. 10 ( Regulation ), Regulation respecting Definitions, CQLR, c. V-1.1, r. 3, and the following defined terms: closing of the distribution means, at the discretion of the issuer, any time after the minimum offering amount is reached; corresponding start-up crowdfunding order means an order issued or a rule adopted by another securities regulatory authority or regulator, the terms of which are substantially similar to this order; eligible security means a common share, a non-convertible preference share, a security convertible into a common share or a non-convertible preference share, a non-convertible debt security linked to a fixed or floating interest rate, or a unit of a limited partnership; funding portal means a person that facilitates or proposes to facilitate on-line start-up crowdfunding distributions; issuer group means the issuer, an affiliate of the issuer and any other issuer that is engaged in an enterprise with the issuer or an affiliate of the issuer or

21 whose business is founded or organized, directly or indirectly, by the same person or persons who founded or organized the issuer; minimum offering amount means the minimum amount disclosed in the offering document; offering document means duly completed Form 1 Start-up Crowdfunding - Offering Document appended to this Order, prepared in French or in English and French, and including any amendment thereto; participating jurisdictions means British Columbia, Manitoba, New Brunswick, Nova Scotia, Québec, Saskatchewan and any other jurisdiction whose securities regulatory authority or regulator has issued a corresponding start-up crowdfunding order; principal means a promoter, director, officer or control person; risk warning means the document prepared in French or in English and French in accordance with Form 2 Start-up Crowdfunding - Risk Acknowledgement appended to this Order; start-up crowdfunding distribution means a distribution through a funding portal of eligible securities that is exempt from the prospectus requirement under this Order or a corresponding start-up crowdfunding order; Whereas, pursuant to section 263 of the Act, the Authority may, on such conditions as it may determine, exempt a person or a group of persons from any or all of the requirements under Titles II to VI of the Act or the regulations, where it considers the exemption not to be detrimental to the protection of investors; In view of the analysis performed by the Direction du financement des sociétés and the Direction de l encadrement des intermédiaires of the Authority; In view of the joint recommendation made by the Superintendent, Securities Markets and the Superintendent, Client Services and Distribution Oversight to grant these exemptions on the grounds that they are not detrimental to the protection of investors; Accordingly: The Authority exempts an issuer from the prospectus requirement set out in sections 11 and 12 of the Act for a start-up crowdfunding distribution, provided that: 1. The distribution is of its own eligible securities; 2. The distribution and payment for the eligible securities are facilitated through a funding portal that is: (a) relying on the registration exemption in this Order or in a corresponding start-up crowdfunding order; or

22 (b) operated by a registered dealer that has confirmed in writing to the issuer that: (i) (ii) (iii) it has filed a duly completed Form F5, Change of Registration Information of Regulation respecting Registration Information, CQLR, c. V-1.1, r. 12, that describes the change in its business to include operating a funding portal; it meets or will meet the conditions set out in sections 32 to 39 of this Order; and entry to its website is granted only if the person seeking entry first acknowledges entry to the website of a funding portal that is operated by a registered dealer under Canadian securities legislation and will provide advice about the suitability of the eligible securities; 3. The issuer is not a reporting issuer or an investment fund in any jurisdiction of Canada or foreign jurisdiction; 4. The head office of the issuer is located in a participating jurisdiction; 5. The aggregate funds raised in any start-up crowdfunding distribution by any person in the issuer group does not exceed $250,000; 6. The issuer group is restricted to no more than two start-up crowdfunding distributions in a calendar year; 7. The distribution closes no later than the 90 th day after the first date the offering document is made available to purchasers on the funding portal s website; 8. The issuer uses an offering document to conduct the distribution and provides the offering document to the funding portal for the purpose of making it available to purchasers through the funding portal s website; 9. The issuer amends the offering document in the event the document is no longer true and provides it to the funding portal as soon as practicable for the purpose of making it available to purchasers through the funding portal s website; 10. The issuer provides purchasers with a contractual right to withdraw a subscription for eligible securities that may be exercised by a purchaser delivering a notice to the funding portal within 48 hours of either the purchaser s subscription or notification by the funding portal to purchasers that the offering document has been amended; 11. The offering document discloses how the issuer intends to use the funds raised and the minimum offering amount required to close the distribution;

23 12. The issuer raises the minimum offering amount described in the offering document, which may be reduced by the amount of any concurrent distribution made under a prospectus exemption other than the prospectus exemption set out in this Order and a corresponding start-up crowdfunding order, provided that the funds from the concurrent distribution are unconditionally available to the issuer; 13. No concurrent start-up crowdfunding distribution is made by any person in the issuer group for the purpose described in the offering document; 14. No commission, fee or other amounts are paid to the issuer group or any of its principals, employees or agents with respect to the distribution; 15. No principal of the issuer group is a principal of the funding portal; 16. No purchaser invests, directly or indirectly, more than $1,500 in any startup crowdfunding distribution; 17. No later than the 30 th day after the closing of the distribution, the issuer delivers, or causes to be delivered, to each purchaser a confirmation setting out the date of subscription and the closing of the distribution, the quantity and description of the eligible securities purchased, the price per eligible security paid by the purchaser and the total commission, fee and any other amounts paid by the issuer to the funding portal in respect of the start-up crowdfunding distribution; 18. No later than the 30 th day after the closing of the distribution, the issuer files with the Authority the offering document as well as the report prepared in accordance with Form 5 Start-up Crowdfunding - Report of Exempt Distribution appended to this Order; 19. The first trade of securities acquired in a start-up crowdfunding distribution is subject to section 2.5 of Regulation respecting Resale of Securities, CQLR, c. V-1.1, r. 20. Except for section 14.6 of Regulation , which continues to apply, the Authority exempts a funding portal from the registration requirement set out in section 148 of the Act and the requirements applicable to registrants set out in the Act and its regulations for a trade in connection with a start-up crowdfunding distribution, provided that: 20. The funding portal does not facilitate its first start-up crowdfunding distribution until: (a) 30 days after it delivers to the Authority: (i) a duly completed Form 3 Start-up Crowdfunding - Funding Portal Information Form appended to this Order; (ii) a duly completed Form 4 Start-up Crowdfunding - Funding Portal Individual Information Form appended to this Order, for each principal of the funding portal; and

24 (iii) such other documents as may be requested by the Authority; or (b) the date the Authority confirms its review is complete, if the Authority notifies the funding portal that more time is required to review the documents required under subsection (a); 21. The funding portal delivers to the Authority any amendments to the documents referred to in subsection 20(a) as soon as practicable; 22. The funding portal has not been notified by the Authority that its business is prejudicial to the public interest because the principals or their past conduct demonstrate a lack of integrity, financial responsibility, or relevant knowledge or expertise; 23. The head office of the funding portal is located in a jurisdiction of Canada; 24. The majority of the directors of the funding portal are residents in Canada; 25. The funding portal maintains books and records at its head office to accurately record its financial affairs and client transactions and to demonstrate its compliance with this Order for a period of eight years from the date a record is created; 26. The funding portal undertakes to make available to the Authority, upon request, the books and records referred to in section 25; 27. The funding portal is not registered under Canadian securities legislation; 28. The funding portal does not provide advice to purchasers or otherwise make recommendations or representations about the suitability of eligible securities or the merits of the investment; 29. Entry to the funding portal s website is granted only if the person seeking entry first acknowledges entry to a website of a funding portal that is not registered under Canadian securities legislation and does not provide any advice about the suitability of eligible securities or the merits of the investment; 30. The funding portal discloses on its website, for each of its principals, their full legal name, municipality and jurisdiction of residence, business mailing and address, and business telephone number; 31. The funding portal does not receive a commission, fee or other amount from any purchaser; 32. The funding portal receives payment for eligible securities electronically through the funding portal s website;

25 33. The funding portal takes reasonable measures to ensure that issuers and purchasers are residents of a participating jurisdiction where the offering document is made available; 34. The funding portal makes the offering document and the risk warning available to purchasers through its website; 35. The funding portal does not allow a purchaser to subscribe for eligible securities until the purchaser confirms that the purchaser has read and understood the offering document and the risk warning; 36. The funding portal notifies purchasers of any amendment to the offering document and the right of purchasers, set out in section 10, to withdraw their subscription within 48 hours after receiving notification of the amendment; 37. The funding portal returns all funds to a purchaser within five business days of receiving a withdrawal notification from that purchaser; 38. If the minimum offering amount has not been raised by the 90 th day after the offering document is first made available to purchasers on the funding portal s website or if the start-up crowdfunding distribution is withdrawn, the funding portal returns, or causes to be returned, no later than five business days following such occurrence, all funds to each purchaser and notifies the issuer and each purchaser that the funds have been returned; 39. At the closing of the distribution, if every 48-hour period set aside to exercise the right of withdrawal in section 10 has elapsed, the funding portal releases, or causes to be released, all funds due to the issuer and, no later than 15 days after the closing of the distribution: (a) (b) it notifies each purchaser that the funds have been released to the issuer; and it provides the issuer with all the information it requires to comply with the condition set out in section 18. This order ceases to have effect on May 13, Signed on May 13, Louis Morisset President and Chief Executive Officer

26 Form 1 - Start-up Crowdfunding Offering Document GENERAL INSTRUCTIONS: (1) This offering document and all amendments must be typed, printed, signed, and filed with the securities regulatory authority or regulator of each of the participating jurisdictions where the issuer has made a start-up crowdfunding distribution, as well as with the securities regulatory authority or regulator in the issuer s head office jurisdiction at the address(es) provided on the last page of this form no later than the 30th day after the closing of the distribution. Issuers must also file a report of exempt distribution no later than the 30th day after the closing of the distribution. (2) This offering document must be completed and certified by an authorized individual on behalf of the issuer. (3) Draft this offering document so that it is easy to read and understand. Be concise and use clear, plain language. Avoid technical terms. (4) Conform as closely as possible to the format set out in this form. Address the items in the order set out below. No variation of headings, numbering or information set out in the form is allowed and all are to be displayed as shown. (5) For information on how to complete this form, please refer to the Start-up Crowdfunding Guide for Businesses available on the website of the securities regulatory authority or regulator of the participating jurisdictions. (6) This offering document is to be provided to your funding portal which has to make it available on its website. If the information contained in this offering document no longer applies or is no longer true, you must immediately amend the document and send the new version to the funding portal. Item 1: RISKS OF INVESTING 1.1 Include the following statement, in bold type: No securities regulatory authority or regulator has assessed reviewed or approved the merits of these securities or reviewed this offering document. Any representation to the contrary is an offence. This is a risky investment. Item 2: THE ISSUER 2.1 Provide the following information for the issuer: (a) Full legal name as it appears in the issuer s organizing documents, (b) Head office address, 1

27 (c) Telephone, (d) Fax, and (e) Website URL. 2.2 Provide the following information for a contact person of the issuer who is able to answer questions from purchasers and security regulatory authority or regulator: (a) Full legal name (first name, middle name and last name), (b) Position held with the issuer, (c) Business address, (d) Business telephone, (e) Fax, and (f) Business . Item 3: BUSINESS OVERVIEW 3.1 Briefly explain, in a few lines, the issuer s business and why the issuer is raising funds. Include the following statement, in bold type: A more detailed description of the issuer s business is provided below. Item 4: MANAGEMENT 4.1 Provide the information in the following table for each promoter, director, officer and control person of the issuer: Full legal name municipality of residence and position at issuer Principal occupation for the last five years Expertise, education, and experience that is relevant to the issuer s business Number and type of securities of the issuer owned Date securities were acquired and price paid for the securities Percentage of the issuer s securities held as of the date of this offering document 4.2 State whether each person listed in item 4.1 or the issuer, as the case may be: (a) has ever, pled guilty to or been found guilty of: (i) a summary conviction or indictable offence under the Criminal Code (R.S.C., 1985, c. C-46) of Canada, (ii) a quasi-criminal offence in any jurisdiction of Canada or a foreign jurisdiction, 2

28 (iii) a misdemeanour or felony under the criminal legislation of the United States of America, or any state or territory therein, or (iv) an offence under the criminal legislation of any other foreign jurisdiction, (b) is or has been the subject of an order (cease trade or otherwise), judgment, decree, sanction, or administrative penalty imposed by a government agency, administrative agency, selfregulatory organization, civil court, or administrative court of Canada or a foreign jurisdiction in the last ten years related to his or her involvement in any type of business, securities, insurance or banking activity, (c) is or has been the subject of a bankruptcy or insolvency proceeding, (d) is a director or executive officer of an issuer that is or has been subject to a proceeding described in paragraphs (a), (b) or (c) above. Item 5: START-UP CROWDFUNDING DISTRIBUTION 5.1 Provide the name of the funding portal the issuer is using to conduct its start-up crowdfunding distribution. 5.2 List the name of all the participating jurisdictions (Canadian province or territory) where the issuer intends to raise funds and make this offering document available. 5.3 Provide the following information with respect to the start-up crowdfunding distribution: (a) the date before which the issuer must have raised the minimum offering amount for the closing of the distribution (no later than 90 days after the date this offering document is made available on the funding portal), and (b) the date(s) and description of any amendment(s) made to this offering document, if any. 5.4 Indicate the type of eligible securities offered. 5.5 The eligible securities offered provide the following rights (choose all that apply): Voting rights, Dividends or interests (describe any right to receive dividends or interest), Rights on dissolution, Conversion rights (describe what each security is convertible into), Other (describe the rights). 3

29 5.6 Provide a brief summary of any other material restrictions or conditions that attach to the eligible securities being offered, such as tag-along, drag along or pre-emptive rights. 5.7 In a table, provide the following information: Minimum offering amount Maximum offering amount Price per eligible security Total amount ($) Total number of eligible securities issuable 5.8 Indicate the minimum investment amount per purchaser, if any. Item 6: ISSUER S BUSINESS 6.1 Describe the issuer s business. Provide details about the issuer s industry and operations. 6.2 Describe the legal structure of the issuer and indicate the jurisdiction where the issuer is incorporated or organized. 6.3 Indicate where the issuer s articles of incorporation, limited partnership agreement, shareholder agreement or similar document are available to purchasers. 6.4 Indicate which statement(s) best describe the issuer s operations (select all that apply): Has never conducted operations, Is in the development stage, Is currently conducting operations, Has shown profit in the last financial year. 6.5 Indicate whether the issuer has financial statements available. If yes, include the following statement, in bold type: Information for purchasers: If you receive financial statements from an issuer conducting a start-up crowdfunding distribution, you should know that those financial statements have not been provided to or reviewed by a securities regulatory authority or regulator. They are not part of this offering document. You should ask the issuer which accounting standards were used to prepare the financial statements and whether the financial statements have been audited. You should also consider seeking advice of an accountant or an independent financial adviser about the information in the financial statements. Item 7: USE OF FUNDS 7.1 Provide information on all funds previously raised and how they were used by the issuer. 4

30 7.2 Using the following table, provide a detailed breakdown of how the issuer will use the funds from this start-up crowdfunding distribution. If any of the funds will be paid directly or indirectly to a promoter, director, officer or control person of the issuer, disclose in a note to the table the name of the person, the relationship to the issuer and the amount. If more than 10% of the available funds will be used by the issuer to pay debt and the issuer incurred the debt within the two preceding financial years, describe why the debt was incurred. Description of intended use of funds listed in order or priority Total amount ($) Assuming minimum offering amount Assuming maximum offering amount Item 8: PREVIOUS START-UP CROWDFUNDING DISTRIBUTIONS 8.1 For each start-up crowdfunding distribution in which the issuer and each promoter, director, officer and control person of the issuer have been involved in any of the participating jurisdictions in the past five years, provide the information below: (a) the full legal name of the issuer that made the distribution, (b) the name of the funding portal, and (c) whether the distribution successfully closed, was withdrawn by the issuer or did not close because the minimum offering amount was not reached and the date on which any of these occurred. Item 9: COMPENSATION PAID TO FUNDING PORTAL 9.1 Describe the commission, fee and any other amounts expected to be paid by the issuer to the funding portal for this start-up crowdfunding distribution. Item 10: RISK FACTORS 10.1 Describe in order of importance, starting with the most important, the main risks of investing in the issuer s business for the purchasers. Item 11: REPORTING OBLIGATIONS 11.1 Describe the nature and frequency of any disclosure of information the issuer intends to provide to purchasers after the closing of the distribution and explain how purchasers can access this information. 5

31 Item 12: RESALE RESTRICTIONS 12.1 Include the following statement, in bold type: The securities you are purchasing are subject to a resale restriction. You may never be able to resell the securities. Item 13: PURCHASERS RIGHTS 13.1 Include the following statement, in bold type: If you purchase these securities, your rights may be limited and you will not have the same rights that are attached to a prospectus under applicable securities legislation. For information about your rights you should consult a lawyer. You can cancel your agreement to purchase these securities. To do so, you must send a notice to the funding portal within 48 hours of your subscription. If there is an amendment to this offering document, you can cancel your agreement to purchase these securities by sending a notice to the funding portal within 48 hours of receiving notice of the amendment. The offering of securities described in this offering document is made pursuant to a start-up crowdfunding registration and prospectus exemptions order issued by the securities regulatory authority or regulator in each participating jurisdiction exempting the issuer from the prospectus requirement. [If the funding portal is not operated by a registered dealer in any of the participating jurisdictions where you intend to raise funds, add the phrase and the funding portal from the registration requirement after the words prospectus requirement in the above paragraph]. Item 14: DATE AND CERTIFICATE 14.1 Include the following statement, in bold type: On behalf of the issuer, I certify that the statements made in this offering document are true Provide the signature, date of the signature, name and position of the authorized individual certifying this offering document If this offering document is signed electronically, include the following statement, in bold type: I acknowledge that I am signing this offering document electronically and agree that this is the legal equivalent of my handwritten signature. I will not at any time in the future claim that my electronic signature is not legally binding. 6

32 Securities regulatory authority and regulators of the participating jurisdictions: British Columbia British Columbia Securities CommissionThe document must be filed electronically at the same time as the report of exempt distribution in Form F6 at (click on BCSC eservices and follow the steps). Manitoba New Brunswick The Manitoba Securities Commission St Mary Avenue Winnipeg, Manitoba R3C 4K5 Telephone: Toll free in Manitoba: Fax: Financial and Consumer Services Commission 85 Charlotte Street, Suite 300 Saint John, New Brunswick E2L 2J2 Toll free: Fax: Nova Scotia Nova Scotia Securities Commission Suite 400, 5251 Duke Street Halifax, Nova Scotia B3J 1P3 Telephone: Toll free in Nova Scotia: Fax:

33 Québec Autorité des marchés financiers Direction du financement des sociétés 800, rue du Square-Victoria, 22nd floor P.O. Box 246, Tour de la Bourse Montréal, Québec H4Z 1G3 Telephone: Toll free in Québec: Fax: Saskatchewan Financial and Consumer Affairs Authority of Saskatchewan Securities Division Suite Saskatchewan Drive Regina, Saskatchewan S4P 4H2 Telephone: Fax:

34 Form 2 - Start-up Crowdfunding Risk Acknowledgement Issuer Name: Type of Eligible Security Offered: WARNING! BUYER BEWARE: This investment is risky. Don t invest unless you can afford to lose all the money you pay for this investment. Yes No 1. Risk acknowledgment Risk of loss Do you understand that this is a risky investment and that you may lose all the money you pay for this investment? No income Do you understand that you may not earn any income, such as dividends or interest, on this investment? Liquidity risk Do you understand that you may never be able to sell this investment? Lack of information Do you understand that you may not be provided with any ongoing information about the issuer and/or this investment? 2. No approval and no advice [Instructions: Delete no advice if the funding portal is operated by a registered dealer.] No approval Do you understand that this investment has not been reviewed or approved in any way by a securities regulator? No advice Do you understand that you will not receive advice about your investment? [Instructions: Delete if the funding portal is operated by a registered dealer.] 3. Limited legal rights Limited legal rights Do you understand that you will not have the same rights as if you purchased under a prospectus or through a stock exchange? If you want to know more, you may need to seek professional legal advice.

35 Yes No 4. Purchaser s acknowledgement Investment risks Have you read this form and do you understand the risks of making this investment? Offering document Before you invest, you should read the offering document carefully. The offering document contains important information about this investment. If you have not read the offering document or if you do not understand the information in it, you should not invest. Have you read and do you understand the information in the offering document? First and last name: Electronic signature: By clicking the [I confirm] button, I acknowledge that I am signing this form electronically and agree that this is the legal equivalent of my handwritten signature. I will not at any time in the future claim that my electronic signature is not legally binding. The date of my electronic signature is the same as my acknowledgement. 5. Additional information You have 48 hours to cancel your purchase by sending a notice to the funding portal at: [Instructions: Provide address or fax number where purchasers can send their notice. Describe any other manner for purchasers to cancel their purchase.] If you want more information about your local securities regulation, go to Securities regulators do not provide advice on investment. To check if the funding portal is operated by a registered dealer, go to [Instructions: Delete if the funding portal is not operated by a registered dealer.]

36 Form 3 Start-up Crowdfunding Funding Portal Information Form GENERAL INSTRUCTIONS: (1) This form must be typed, printed, signed and delivered via with any attachments and all corresponding Start-up Crowdfunding - Funding Portal - Individual Information Forms to the securities regulatory authority or regulator of each of the participating jurisdictions where the funding portal facilitates or intends to facilitate a start-up crowdfunding distribution at the address(es) provided on the last page of this form. (2) This form must be completed and certified by an authorized individual on behalf of the funding portal. (3) Question 7 and questions 9 to 16: Please check the appropriate space provided. If your answer to any of these questions is Yes, you must, in an attachment, provide complete details, including the circumstances, relevant dates, names of the parties involved and final disposition, if known. Any attachment must be initialed by the authorized individual certifying this form. Responses must consider all time periods. (4) If a change occurs and the form and documents filed with the securities regulatory authority or regulator are no longer up to date, or the information they contain is no longer true, you must complete a new form setting out the change, and deliver it to the securities regulatory authority or regulator of each applicable participating jurisdiction as soon as practicable. (5) For funding portal information, please refer to the Start-up Crowdfunding Guide for Funding Portals available on the website of the securities regulatory authority or regulator of the participating jurisdictions. (6) The securities regulatory authority or regulator to which this form is delivered may request the funding portal to provide supporting documents. Please refer to Start-up Crowdfunding Guide for Funding Portals for examples of supporting documents. FUNDING PORTAL INFORMATION 1. Provide the following information regarding the funding portal: (a) Full legal name of the funding portal as it appears on the funding portal s organizing documents; (b) Name that the funding portal will be operating under; (c) Website URL; (d) Head office address; (e) Telephone; (f) Fax; and (g) address.

37 2. Provide the following information regarding the contact person for the funding portal: (a) Full legal name (first name, middle name and last name); (b) Business address; (c) Telephone; (d) Fax; and (e) address. 3. Provide the following information regarding each promoter, director, officer and control person of the funding portal. Use an attachment if necessary. Any attachment must be initialed by the authorized individual certifying this form. (a) Full legal name (first name, middle name and last name); and (b) Position(s) held. 4. Provide the name of each participating jurisdiction where the funding portal is delivering this form. 5. Provide the date the funding portal expects to begin to facilitate start-up crowdfunding distributions in the participating jurisdictions named in item 4 above. 6. If the funding portal is already relying on start-up crowdfunding registration and prospectus exemptions in any participating jurisdiction, provide the name(s) of the participating jurisdiction(s) and the date the Funding Portal Information Form was delivered to the securities regulatory authority or regulator. 7. Has the funding portal ever been notified by a securities regulatory authority or regulator that it cannot rely on the start-up crowdfunding registration and prospectus exemptions? Yes No If yes, you must provide details. 8. Describe the legal structure of the funding portal and indicate the jurisdiction where the funding portal is incorporated or organized. CRIMINAL DISCLOSURE 9. Has the funding portal ever been found guilty, pleaded no contest to, or been granted an absolute or conditional discharge from: (a) a summary conviction or indictable offence under the Criminal Code (R.S.C., 1985, c. C-46) (Canada), (b) a quasi-criminal offence in any jurisdiction of Canada or a foreign jurisdiction, (c) a misdemeanour or felony under the criminal legislation of the United States of America, or any state or territory therein, or (d) an offence under the criminal legislation of any other foreign jurisdiction. Yes No

38 If yes, you must provide details. 10. Are there any outstanding or stayed charges against the funding portal alleging a criminal offence that was committed? Yes No If yes, you must provide details. CIVIL DISCLOSURE 11. Has the funding portal ever been the subject of an order, judgment, decree, sanction, or administrative penalty in Canada or a foreign jurisdiction in the last ten years related to its involvement in any type of business, securities, insurance or banking activity? Yes No If yes, you must provide details. 12. Are there currently any outstanding civil actions alleging fraud, theft, deceit, misrepresentation, or similar misconduct against the funding portal? Yes No If yes, you must provide details. 13. Has the funding portal ever been a defendant or respondent in any civil proceeding in which fraud, theft, deceit, misrepresentation, or similar misconduct is, or was, successfully established in a judgement? Yes No If yes, you must provide details. FINANCIAL DISCLOSURE 14. Has the funding portal ever had a petition in bankruptcy issued or made a voluntary assignment in bankruptcy or any similar proceeding? Yes No If yes, you must provide details. 15. Has the funding portal made a proposal under any legislation relating to bankruptcy or insolvency or any similar proceeding? Yes No If yes, you must provide details.

39 16. Has the funding portal ever been subject to, or initiated any proceedings, arrangement or compromise with creditors? This includes having a receiver, receiver-manager, administrator or trustee appointed by or at the request of creditors, privately, through court process or by order of a regulatory authority, to hold funding portal assets. Yes No If yes, you must provide details. 17. Provide details on the process and procedure for handling all funds in relation to the start-up crowdfunding distribution. COLLECTION AND USE OF INFORMATION The information required under this form is collected, used and disclosed by the securities regulatory authority or, where applicable, regulator of the participating jurisdictions under the authority granted in securities legislation for the purposes of the administration and enforcement of the securities legislation. By submitting this form, the funding portal: acknowledges that the securities regulatory authority or regulator may collect personal information about the individuals referred to in this form or information about the funding portal, and confirms that the individuals referred to in this form have been notified that their personal information is disclosed on this form, the legal reason for doing so, how it will be used and who to contact for more information. If you have any questions about the collection and use of this information, contact the securities regulatory authority or regulator in any participating jurisdiction in which this form is delivered. Contact information is listed at the end of this form.

40 CERTIFICATION By signing this form, the funding portal undertakes: to comply with all of the applicable conditions set out in the start-up crowdfunding registration and prospectus exemptions of each participating jurisdiction where this form is delivered, and to provide upon request to the securities regulatory authority or regulator of a participating jurisdiction access to the books and records maintained at its head office in accordance with the start-up crowdfunding registration and prospectus exemptions. On behalf of the funding portal, I certify that the statements made in this form are true and complete. Signature: Date: Full legal name of funding portal: Print name: Position held: Telephone: IT IS AN OFFENCE TO MAKE A MISREPRESENTATION IN THIS FORM

41 Deliver by to the securities regulatory authority or regulator of each applicable participating jurisdiction: British Columbia Manitoba New Brunswick Nova Scotia British Columbia Securities Commission P.O. Box 10142, Pacific Centre 701 West Georgia Street Vancouver, BC V7Y 1L2 Telephone: Toll free across Canada: The Manitoba Securities Commission St Mary Avenue Winnipeg, Manitoba R3C 4K5 Telephone: Toll free in Manitoba: Financial and Consumer Services Commission 85 Charlotte Street, Suite 300 Saint John, New Brunswick E2L 2J2 Toll free: Nova Scotia Securities Commission Suite 400, 5251 Duke Street Halifax, Nova Scotia B3J 1P3 Telephone: Toll free in Nova Scotia:

42 Québec Saskatchewan Autorité des marchés financiers Direction du financement des sociétés 800, rue du Square-Victoria, 22nd floor P.O. Box 246, Tour de la Bourse Montréal, Québec H4Z 1G3 Telephone: Toll free in Québec: Financial and Consumer Affairs Authority of Saskatchewan Securities Division Suite Saskatchewan Drive Regina, Saskatchewan S4P 4H2 Telephone:

43 Form 4 - Start-up Crowdfunding Funding Portal Individual Information Form GENERAL INSTRUCTIONS: (1) This form must be typed, printed, signed and delivered via with any attachments and the corresponding Start-up Crowdfunding - Funding Portal Information Form to the securities regulatory authority or regulator of each of the participating jurisdictions where the funding portal facilitates or intends to facilitate a start-up crowdfunding distribution at the address(es) provided on the last page of this form. (2) This form must be completed and certified by each promoter, director, officer, and control person of the funding portal. (3) The information provided on this form must be specific to the individual certifying this form. (4) Question 4 and questions 10 to 22: Please check the appropriate space provided. If your answer to any of these questions is Yes, you must, in an attachment, provide complete details, including the circumstances, relevant dates, names of the parties involved and final disposition, if known. Any attachment must be initialed by the individual certifying this form. Responses must consider all time periods. (5) If a change occurs and the form and documents filed with the securities regulatory authority or regulator are no longer up to date or the information they contain is no longer true, you must complete a new form setting out the change, and deliver it to the securities regulatory authority or regulator of each applicable participating jurisdiction as soon as practicable. (6) For funding portal information, please refer to the Start-up Crowdfunding Guide for Funding Portals available on the website of the securities regulatory authority or regulator of the participating jurisdictions. FUNDING PORTAL INFORMATION 1. Provide the full legal name of the funding portal as it appears on the funding portal s organizing documents. 2. Indicate the position(s) you hold with the funding portal. INDIVIDUAL INFORMATION 3. Full legal name: First name Middle name(s) Last name 4. Are you currently, or have you ever been, known by any name(s) other than your full legal name stated above, for example nicknames or names due to marriage? Yes No

44 If yes, you must provide details. 5. Telephone, fax number and address: Residential: ( ) Fax number: ( ) Business: ( ) 6. Provide all residential addresses for the past five years starting with your current residential address. Number, street, city, province, territory or state, country and postal/zip code From To MM YYYY MM YYYY 7. If you are not a resident of Canada, you must have one address for service of process in Canada and provide the following information: Name of agent for service: Name of contact person: Address for service: Telephone: 8. Sex, date and place of birth: Sex Date of birth Place of birth Female MM DD YYYY City Province/ Territory/ State Male Country 9. Country of citizenship:

45 10. Are you currently or have you ever been registered or licensed in any capacity with any Canadian securities regulatory authority or regulator, or with any other professional or regulatory entity? Yes No If yes, you must provide your licence/ registration type, name of the entity, and the start date and ending date, if applicable: 11. Have you ever been dismissed for cause by an employer from a position following allegations that you: violated any statutes, regulations, rules or standards of conduct; failed to appropriately supervise compliance with any statutes, regulations, rules or standards of conduct; or committed fraud or the wrongful taking of property, including theft? Yes No If yes, you must provide details. CRIMINAL DISCLOSURE 12. Have you ever been found guilty, pleaded no contest to, or been granted an absolute or conditional discharge from: a summary conviction or indictable offence under the Criminal Code (R.S.C., 1985, c. C-46) (Canada), a quasi-criminal offence in any jurisdiction of Canada or a foreign jurisdiction, a misdemeanour or felony under the criminal legislation of the United States of America, or any state or territory therein, or an offence under the criminal legislation of any other foreign jurisdiction. Yes No If yes, you must provide details. 13. Are there any outstanding or stayed charges against you alleging a criminal offence that was committed? Yes No If yes, you must provide details. 14. To the best of your knowledge, are there any outstanding or stayed charges against any entity of which you were, at the time the criminal offence was alleged to have taken place, a promoter, director, officer or control person? Yes No

46 If yes, you must provide details. 15. To the best of your knowledge, has any entity, when you were a promoter, director, officer or control person, ever been found guilty, pleaded no contest to or been granted an absolute or conditional discharge from a criminal offence that was committed? Yes No If yes, you must provide details. CIVIL DISCLOSURE 16. Have you ever been the subject of an order, judgment, decree, sanction, or administrative penalty in Canada or a foreign jurisdiction in the last ten years related to your involvement in any type of business, securities, insurance or banking activity? Yes No If yes, you must provide details. 17. Are there currently any outstanding civil actions alleging fraud, theft, deceit, misrepresentation, or similar misconduct against you or an entity of which you are or were a promoter, director, officer or control person? Yes No If yes, you must provide details. 18. Have you or an entity of which you are or were a promoter, director, officer or control person ever been a defendant or respondent in any civil proceeding in which a fraud, theft, deceit, misrepresentation, or similar misconduct is, or was, successfully established in a judgement? Yes No If yes, you must provide details. FINANCIAL DISCLOSURE 19. Have you or any entity when you were a promoter, director, officer or control person of that entity, ever had a petition in bankruptcy issued or made a voluntary assignment in bankruptcy or any similar proceeding? Yes No If yes, you must provide details. 20. Have you or any entity when you were a promoter, director, officer or control person of that entity made a proposal under any legislation relating to bankruptcy or insolvency or any similar proceeding?

47 Yes No If yes, you must provide details. 21. Have you or any entity when you were a promoter, director, officer or control person of that entity ever been subject to proceedings under any legislation relating to the winding up or dissolution of that entity, or under the Companies Creditors Arrangement Act (Canada) or similar legislation? Yes No If yes, you must provide details. 22. Have you or any entity when you were a promoter, director, officer or control person of that entity ever been subject to, or initiated any proceedings, arrangement or compromise with creditors? This includes having a receiver, receiver-manager, administrator or trustee appointed by or at the request of creditors, privately, through court process or by order of a regulatory authority, to hold your assets. Yes No If yes, you must provide details. COLLECTION AND USE OF PERSONAL INFORMATION The personal information required under this form is collected, used and disclosed by the securities regulatory authority or, where applicable, regulator of the participating jurisdictions under the authority granted in securities legislation for the purposes of the administration and enforcement of the securities legislation. By submitting this form, you consent to the collection, use and disclosure of this personal information by the securities regulatory authority or regulator of each participating jurisdiction and any police records, records from other government or non-governmental regulators or self-regulatory organizations, credit records and employment records about you that the securities regulatory authority or regulator may need to determine the completeness of the information submitted in this form and compliance with the conditions of the start-up crowdfunding registration and prospectus exemptions. The securities regulatory authority or regulator may contact government and private bodies or agencies, individuals, corporations and other organizations for information about you. If you have any questions about the collection and use of this information, contact the securities regulatory authority or regulator of any participating jurisdiction in which this form is delivered. Contact information is listed at the end of this form.

48 CERTIFICATION By submitting this form, I: certify that the statements made in this form are true and complete, and agree to be subject to the securities legislation of each participating jurisdiction of Canada where I have submitted this form. This includes the jurisdiction of any tribunals or any proceedings that relate to my activities as a promoter, director, officer or control person of a funding portal under applicable securities legislation. Signature: Date: Print name: Position held: IT IS AN OFFENCE TO MAKE A MISREPRESENTATION IN THIS FORM

49 Deliver by to the securities regulatory authority or regulator of each applicable participating jurisdiction: British Columbia Manitoba New Brunswick Nova Scotia British Columbia Securities Commission P.O. Box 10142, Pacific Centre 701 West Georgia Street Vancouver, BC V7Y 1L2 Telephone: Toll free across Canada: The Manitoba Securities Commission St Mary Avenue Winnipeg, Manitoba R3C 4K5 Telephone: Toll free in Manitoba: Financial and Consumer Services Commission 85 Charlotte Street, Suite 300 Saint John, New Brunswick E2L 2J2 Toll free: Nova Scotia Securities Commission Suite 400, 5251 Duke Street Halifax, Nova Scotia B3J 1P3 Telephone: Toll free in Nova Scotia:

50 Québec Saskatchewan Autorité des marchés financiers Direction du financement des sociétés 800, rue du Square-Victoria, 22nd floor P.O. Box 246, Tour de la Bourse Montréal, Québec H4Z 1G3 Telephone: Toll free in Québec: Financial and Consumer Affairs Authority of Saskatchewan Securities Division Suite Saskatchewan Drive Regina, Saskatchewan S4P 4H2 Telephone:

51 Form 5 - Start-up Crowdfunding Report of Exempt Distribution GENERAL INSTRUCTIONS: (1) This report must be typed, printed, signed, and filed with the securities regulatory authority or regulator of each of the participating jurisdictions where the issuer has made a start-up crowdfunding distribution, as well as with the securities regulatory authority or regulator in the issuer s head office jurisdiction at the address(es) provided on the last page of this form no later than the 30th day after the closing of the distribution. Issuers must also file the offering document no later than the 30th day after the closing of the distribution. (2) References to a purchaser in this report are to the beneficial owner of the securities. (3) This form must be completed and certified by an authorized individual on behalf of the issuer. (4) For issuer information, please refer to the Start-up Crowdfunding Guide for Businesses available on the website of the securities regulatory authority or regulator of the participating jurisdictions. ISSUER INFORMATION 1. Full legal name: Former legal name (if the name has changed since last report): Head office address: Telephone: Website URL: Fax: 2. Full legal name of contact person: Business address: Telephone: Position with issuer Fax: 3. Indicate the industry of the issuer by checking the appropriate box: Bio-tech Hi-tech Oil and gas Financial Services Industrial Real estate Forestry Mining Utilities Other (describe):

52 START-UP CROWDFUNDING DISTRIBUTION 4. Date the offering document was first made available to purchasers through the funding portal: Date of the closing of the distribution: 5. Type of eligible securities offered: 6. If the eligible securities offered are convertible, describe the type of underlying security, the terms of conversion and any expiry date: 7. Total number of eligible securities distributed: Price per eligible security ($): 8. Aggregate funds raised through this distribution ($): 9. Total commission, fee and any other amount paid to the funding portal for this distribution ($): 10. Complete Schedule 1 to this report. 11. Complete the following table for each participating jurisdiction where purchasers of the securities reside. Each participating jurisdiction where purchasers reside Number of purchasers Total funds raised from purchasers in the jurisdiction ($) Total number of purchasers Total funds raised from purchasers in all the participating jurisdictions ($)

53 CERTIFICATE On behalf of the issuer, I certify that the statements made in this report are true and complete. Full legal name of issuer: Signature: Date: Print name: Position held: Telephone: IT IS AN OFFENCE TO MAKE A MISREPRESENTATION IN THIS REPORT

54 NOTICE - COLLECTION AND USE OF PERSONAL INFORMATION The personal information required under this report is collected on behalf of and used by the securities regulatory authorities or, where applicable, the regulators of the participating jurisdictions under the authority granted in securities legislation for the purposes of the administration and enforcement of the securities legislation. If you have any questions about the collection and use of this information, contact the securities regulatory authority or, where applicable, the regulator in each of the participating jurisdictions where the report is filed, at the address(es) listed at the end of this report.

55 SCHEDULE 1 - PURCHASER INFORMATION Provide the information below for each purchaser who purchased eligible securities through the start-up crowdfunding distribution. Use an attachment if necessary. This information will not be placed on the public file of the securities regulatory authority or regulator of the participating jurisdictions. However, freedom of information legislation may require a securities regulatory authority or regulator of a participating jurisdiction to make this information available if requested. Full legal name Residential address, including number, street, city and postal code Province / territory Telephone, including area code Number of eligible securities purchased Total purchase price ($)

56 Securities regulatory authorities and regulators of the participating jurisdictions: Manitoba New Brunswick Nova Scotia Québec Saskatchewan The Manitoba Securities Commission St Mary Avenue Winnipeg, Manitoba R3C 4K5 Telephone: Toll free in Manitoba: Financial and Consumer Services Commission 85 Charlotte Street, Suite 300 Saint John, New Brunswick E2L 2J2 Toll free: Fax: Nova Scotia Securities Commission Suite 400, 5251 Duke Street Halifax, Nova Scotia B3J 1P3 Telephone: Toll free in Nova Scotia: Fax: Autorité des marchés financiers Direction du financement des sociétés 800, rue du Square-Victoria, 22nd floor P.O. Box 246, Tour de la Bourse Montréal, Québec H4Z 1G3 Telephone: Toll free in Québec: Fax: Financial and Consumer Affairs Authority of Saskatchewan Securities Division Suite Saskatchewan Drive Regina, Saskatchewan S4P 4H2 Telephone: Fax: