The crowdfunding regimes include a registration framework for funding portals. The registration of the funding portal is a key investor protection measure as registration addresses, among other things, potential integrity concerns that may apply to funding portals and the persons operating them, as well as potential concerns relating to conflicts of interest and self-dealing. Generally in order to be in the business of selling or advising in securities in New Brunswick, an individual or firm must be registered with FCNB. Registration helps protect investors because FCNB will only register firms and individuals if they are properly qualified and meet a certain standard. The start-up crowdfunding exemption allows the portal to offer for sale a businesses securities without being registered. Under the 45-108 crowdfunding regime, portals may offer for sale the securities of a business but they must be registered as either an investment dealer, exempt market dealer or restricted dealer.
This exemptions allows funding portals to act as an intermediary between the business and the investor. However, funding portals are subject to a number of conditions that are in place to help protect investors. These include conditions around the location of the head office, information that the portal must share with the regulators, disclosure and risk warnings the funding portal must share with investors, how the funding portal handles investors’ money, fees and commissions, and more.
Portals registered in the restricted dealer category under the 45-108 crowdfunding regime cannot provide advice about the suitability of the purchase of the security.
Funding portals cannot receive a commission, fee or other amount from the investors. The portal cannot provide advice or recommendations about a particular investment unless the portal is administered by a dealer registered with FCNB.
Learn more about the details of conditions.
These rules apply only to funding portals facilitating equity crowdfunding – they do not apply to portals that facilitate donation-based crowdfunding (like Kickstarter or Indigogo) or other crowdfunding models.