Restrictions on general solicitation and advertising.
Under the OSC proposed Crowdfunding rules, the only materials that may be offered to potential investors utilizing the Crowdfunding exemption are: the issuer’s offering document; a document described in the offering document (i.e. the issuer’s business plan or shareholders’ agreement and a term sheet or other summary (including a video of the information included in the offering document.
The offering material must be made available through the crowdfunding portal (more on such portals later) and may NOT be available on any other website. The OSC believes that all material should be available to potential investors in one location.
An issuer, portal, or other person involved in the offering may make offering materials available to potential investors and they may advise potential investors that the issuer is proposing to offer its securities and they may also refer the potential investors to the portal. Such advice may be provided on paper or through social media.
While a portal may advertise that an offering is being made through the portal, the issuer, portal and any other person involved with an offering must not advertise the offering or solicit potential investors. The subtlety here is that the terms of the offering may not be advertised, just the fact that an offering is being made through the portal. The National Crowdfunding Association (NCFA) is seeking clarification on whether it would be permissible for the issuer to publish regularly released factual business information, whether on the issuer’s website or otherwise, as long as those communications do not refer to the terms of the offering. What will be the position of potential investors sharing over social media, information about an offering they are interested? Will these potential investors be off-side? How will this be policed? Stay tuned for updates!