November 13, 2020
The Ontario Securities Commission (OSC) is creating a “regulatory sandbox” for startups to provide an opportunity for startup businesses to test novel forms of capital formation with reduced regulatory burdens.
The program will allow the OSC to experiment with non-conventional methods of capital raising, including crowdfunding and angel investment networks.
The decision to form the sandbox was included in a Charter for the OSC’s new Innovation Office, which was established to facilitate innovation, bolster capital formation and reduce the regulatory burden imposed on startups. The OSC’s Launchpad team, which helps startups navigate securities regulations, will be largely responsible for delivering the sandbox program in accordance with the Innovation Office’s mandate.
The OSC is the most recent securities regulator in Canada to offer regulatory exemptions for startups. Of note, the Canadian Securities Administrators (CSA) have instituted a sandbox that has allowed companies to raise capital in innovative ways without having to comply with certain securities regulations.
Author: Aaron Barrett