Financing

Financing comes in several flavours: public, private and “quasi-private”.

As with all things there are advantages and disadvantages to using one over the other. In some cases both are available.

Private Equity

There are two principal requirements commonly found in provincial and territorial statutes regulating the sale of securities: the registration (licensing) of persons who trade in a security and the filing of a prospectus that has been filed and cleared with the appropriate securities regulator. In Ontario these requirements are found in the Securities Act, which governs the issuing of securities in Ontario.

Filing a prospectus is a time consuming and expensive proposition and in fact makes raising small sums prohibitively expensive.  As with other provinces and territories, the Securities Act provides legislative exemptions from these requirements and through these exemptions provide the foundation for the exempt market or "private placement" market in Ontario. Through negotiated policy agreements with the other provinces, many exemptions are relatively uniform across Canada, making it easier to comply with the requirements of each province in which a trade may occur.

Some common and popular exemptions include trading with exempt "purchasers" such as "accredited investors" or issuing the securities of a "closely held issuer". A closely held issuer must not trade securities with a "member of the public". Who is or is not a “closely held issuer”, "accredited investor" or a "member of the public" is tightly defined.

Crowdfunding is coming to Ontario. The Ontario Securities Commission is reviewing a new exemption from the expense of an initial public offering.  Some key provisions include offering only through a registered funding portal; an offering cap of $1.5-million during a 12-month period; a 90 day limit on the offering; and a $2,500 investment limit per offering with a maximum of $10,000 annually for each investor.

Public/Quasi Private

Public financing in the entertainment industry will depend on the particular industry. For film and television production the main federal players are Telefilm Canada (film tv) and Heritage Canada with over 50 programs including: Canadian Media Fund’: Canadian Film or Video Production Tax Credit, Film or Video Production Services Tax Credit. The National Film Board also plays a diminishing role.

Federal support for artists/producers of other art forms including dance, media arts, theatre, visual arts, writing, publishing and music (sound recording and publishing companies) can be found at the Canada Council for the Arts.

In Ontario, public financing for the arts in general is available from the Ontario Arts Council supporting professional artists, groups or collectives and arts organizations (profit oriented corporations are not eligible) based in Ontario in the disciplines of: craft,  dance, literature, media arts,  music, theatre and visual arts.

In Ontario, public financing for profit orientated creators of film, television and books is available through the Ontario Media Development Corporation. Programs support book publishers via the Ontario Book Publishing Tax Credit (funding the marketing of publishers and their individual authors), and film and tv producers via the Ontario Film & Television Tax Credit, the Ontario Production Services Tax Credit, the Ontario Computer Animation & SFX Tax Credit and development and production financing of film through the Film Fund.

There are various funds established under regulators such as the CRTC and others, which while funded all or partially by private monies, operate much the same as the government funding agencies. These funds include the Harold Greenberg Fund (PayTV), the Rogers Group of Funds (TV), the Canadian Independent Film and Video Fund and COGECO Fund (TV).

All of the “public” and “quasi-public” funds have extensive criteria that must be met to qualify for funding; in most cases, there are specific annual or semi-annual application deadlines and limited funds available to an ever increasing demand. The exceptions to the deadlines and limited funds aspect are the tax credit programs, which do have strict criteria to access, but do not have application deadlines and are not limited to allocated funds. Any corporation qualifying for the tax credits is entitled to receive a refundable tax credit (cheque!).

Check out The Funding Portal which aggregates private and public sources of financing.