The definition of a “security” under the Securities Act of Ontario is very wide and includes derivatives and securitized products. The securities that will be permitted to be offered under the proposed Crowd Funding Equities exemption will be restricted to just 6 types of securities.
The Ontario Securities Commission sees the sole purpose of legalizing crowd equity funding as the facilitation of raising of capital by start-ups and Small to Medium Enterprises. With this purpose in mind, it does not think it appropriate to allow complex securities to be offered under the exemption. The implication is, that the potential investor, being a member of the "vulnerable" public, would not have the ability to truly understand the risks of complex securities.
Rather than identify which “complex securities” may NOT be offered, the proposed amendments list those types of securities that will be permitted to be offered. They include: common shares, non-convertible preference shares, securities convertible into common shares or non-convertible preference shares, non-convertible debt securities linked to a fixed or floating interest rate, units of a limited partnership, and flow-through shares under the Income Tax Act (Canada). All of the securities offered in a crowd funding distribution must have the same price, terms and conditions. This last provision, I suspect is for the same reason that the types of securities are limited: potentially unsophisticated investors will be the purchasers.