Policy Statement to Regulation 45-108 Respecting Crowdfunding

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 1 Last Amendments in force on August 25, 2021 POLICY STATEMENT TO REGULATION 45-108 RESPECTING CROWDFUNDING PREAMBLE TO POLICY STATEMENT PURPOSE OF THIS POLICY STATEMENT This Policy Statement sets out how the participating members of the Canadian Securities Administrators (CSA) (the “participating CSA members” or “we”) interpret or apply the provisions of Regulation 45-108 respecting Crowdfunding (chapter V-1.1, r. 21.02) (the “Regulation”), including the required forms, and related securities legislation. The Regulation provides (a) in Part 2, a prospectus exemption for eligible crowdfunding issuers that wish to make a crowdfunding distribution, (b) in Part 3, the registration requirements for funding portals, and (c) in Part 4, who can grant exemptions from the Regulation. References to the Regulation Except for Part 1, all references in this Policy Statement to parts, divisions and sections are to the Regulation, unless otherwise noted. Any general guidance for a part or a division appears immediately after the reference to that part or division name. Any specific guidance on sections in the Regulation follows any general guidance. If there is no guidance for a part, division or section, the numbering in this Policy Statement will skip to the next provision that does have guidance. Models of crowdfunding Crowdfunding is a method of funding a project or venture through amounts of money raised from members of the public over the internet via an online portal. There are at least 4 examples of crowdfunding models:
(a) the donation model, which is the practice of the crowd donating to a project or venture in exchange for nothing of tangible value; (b) the reward model, which is the practice of the crowd donating to a project or venture in exchange for some tangible reward, perk or benefit;

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 2 (c) the pre-purchase model, which is the practice of the crowd donating to a project or venture in exchange for a future tangible reward, such as a consumer product; and (d) the securities-based model, which is the practice of the crowd investing in an issuer and its business in exchange for the issuer’s securities, which are often equity securities but may include other types of securities, including debt securities. Applicability of securities legislation In this Policy Statement, when we refer to a “crowdfunding offering”, we are referring to a distribution of securities made in reliance on the crowdfunding prospectus exemption through a funding portal as described in the Regulation. Crowdfunding activities that are limited to the donation model, reward model and/or pre-purchase model generally will not constitute or involve a distribution of securities. However, crowdfunding offerings using the securities-based model will involve an offering of securities. Issuers that wish to make a crowdfunding offering using the securities-based model will always be subject to securities legislation. Securities-based and non-securities-based crowdfunding An issuer may wish to include both securities and non-securities rewards or benefits in a crowdfunding offering. Permitting an issuer to do so may enable an issuer to derive the benefits of both securities-based and non-securities based crowdfunding. An issuer must disclose in item 5.1 of the crowdfunding offering document a description of any additional rewards or benefits being offered that are not securities. All distributions and other trades are subject to securities legislation The securities legislation of a local jurisdiction applies to any distribution of a security in that jurisdiction, whether or not the issuer of the security is an issuer in that jurisdiction. A person who engages in a distribution must comply with the securities legislation of each jurisdiction in which the distribution occurs. That may include the requirement that such person be registered under securities legislation. A funding portal that carries on business in a jurisdiction (either by facilitating offerings of issuers in that jurisdiction and/or by facilitating offerings to investors in that jurisdiction) must be registered in that jurisdiction. Multi-jurisdictional distributions A distribution can occur in more than one jurisdiction. If it does, the person conducting the distribution must comply with the securities legislation of each jurisdiction in which the distribution occurs. For example, a distribution from a person in Québec to a purchaser in Ontario may be considered a distribution in both jurisdictions.

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 3
PART 1
DEFINITIONS AND INTERPRETATION
Defined terms used in this Policy Statement have the meaning ascribed to them in the Regulation unless otherwise noted. Terms defined or interpreted in other regulations (1) Director – The term “director” referred to in Part 3 is defined in the provincial securities legislation of each of the participating CSA members. (2) Officer – The term “officer” referred to in Part 3 is defined in the provincial securities legislation of each of the participating CSA members. (3) Principal Regulator – A registered dealer funding portal’s principal regulator generally will be determined in accordance with section 4A.1 of Regulation 11-102 respecting Passport System (chapter V-1.1, r. 1). This means that the principal regulator will usually be the securities regulatory authority or regulator in the jurisdiction where the funding portal’s head office is located. (4) Funding portal – There are 2 types of funding portals that can facilitate distributions of securities in reliance on the crowdfunding prospectus exemption:
(a) a funding portal registered in the category of restricted dealer and defined in the Regulation as a restricted dealer funding portal; or (b) a funding portal registered in the category of investment dealer or exempt market dealer and defined in the Regulation as a registered dealer funding portal. (a) Restricted dealer funding portal The restricted dealer category is described in paragraph 7.1(2)(e) of Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations (chapter V-1.1, r. 10) (Regulation 31-103) and permits specialized dealers or other intermediaries with an unconventional business model to carry on a limited trading business, subject to terms and conditions restricting their activities. The restricted dealer funding portal is intended to be a specialized type of restricted dealer with limited permitted dealing activities as described in section 41 [Permitted dealing activities]. Accordingly, the regulatory framework for a restricted dealer funding portal described in Part 3, including the exemptions from certain usual registrant requirements described in subparagraph 21(b)(ii) [Restricted dealer funding portal], is not available to other types of registrants that facilitate the sale of securities through an online portal. A restricted dealer funding portal will not be permitted to obtain dual registration in another registration category. Except in Alberta and Ontario, a restricted dealer funding portal may be affiliated with another registered dealer, registered adviser or registered investment fund manager. A restricted dealer funding portal that is affiliated with another registered firm

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 4 must establish internal controls and appropriate policies and procedures to manage the risks associated with operating an affiliated restricted dealer funding portal. A restricted dealer funding portal should refer to section 13.4 of Policy Statement to Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations (Decision 2011-PDG-0074, 2011-06-07) (Policy Statement 31-
103) to consider ways to identify and respond to conflicts of interest, including avoiding
the conflict if it is significant and cannot be managed appropriately. In addition, a restricted dealer funding portal should be aware of other CSA guidance on registrant obligations to identify and respond to conflicts of interest. (b) Registered dealer funding portal We recognize that other categories of registered dealers, such as investment dealers and exempt market dealers, may operate online portals that facilitate distributions of securities in reliance on other prospectus exemptions, such as the accredited investor exemption in section 2.3 of Regulation 45-106 respecting Prospectus Exemptions (chapter V-1.1, r. 21) (Regulation 45-106) or the offering memorandum exemption in section 2.9 of Regulation 45-106. An investment dealer or exempt market dealer may facilitate distributions of securities in reliance on the crowdfunding prospectus exemption; however, they are required to comply with all of their registrant obligations under securities legislation and Divisions 1 and 2 of Part 3. (5) Registered individual – The term “registered individual” is defined in Regulation 31-103 and ordinarily refers to an individual who is registered as the ultimate designated person (UDP), chief compliance officer (CCO) or a dealing or advising representative of a registered firm. A restricted dealer funding portal is not permitted to provide recommendations or advice to purchasers. Therefore, we do not expect a restricted dealer funding portal will require an individual registered as a dealing or advising representative.
PART 2
CROWDFUNDING PROSPECTUS EXEMPTION
DIVISION 1
Distribution requirements
Reporting and non-reporting issuers – The definition of “eligible crowdfunding issuer” in section 1 [Definitions] outlines certain requirements for the issuer to be eligible to rely on the crowdfunding prospectus exemption. Subject to satisfying these requirements, the crowdfunding prospectus exemption is available to both reporting issuers and non-reporting issuers. Crowdfunding prospectus exemption
5. (1) Distribution period – The Regulation contemplates a distribution period that,
in accordance with paragraph 5(1)(a) [Crowdfunding prospectus exemption], must end no later than 90 days after the date the issuer first offers its securities to purchasers under the crowdfunding prospectus exemption. If an issuer cannot complete an offering within

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 5 the distribution period, the distribution period will expire. An issuer may commence a new crowdfunding offering so long as the issuer is in compliance with subsection 5(2) [Crowdfunding prospectus exemption]. Issuer group limit – Paragraph 5(1)(b) [Crowdfunding prospectus exemption] imposes a $1,500,000 limit on the aggregate proceeds that can be raised by an issuer group under the crowdfunding prospectus exemption within the 12-month period ending on the last day of the distribution period. For example, suppose an issuer group consists of Issuer A, Issuer B and Issuer C. Issuer A proposes to distribute securities under the crowdfunding prospectus exemption and the last day of the distribution period will be March 15, 2015. In this case, the 12-month period to which the $1,500,000 limit applies will commence on March 16, 2014 and end on March 15, 2015. If Issuer B has raised $600,000 under the crowdfunding prospectus exemption during that same 12 month period (i.e., March 16, 2014 to March 15, 2015), the maximum amount Issuer A could raise under the crowdfunding prospectus exemption will be $900,000 ($1,500,000 minus $600,000). If, in addition, Issuer C proposes to raise a maximum of $300,000 in a concurrent distribution under the crowdfunding prospectus exemption that will end on or prior to March 15, 2015, since this is within the same 12 month period, the maximum amount Issuer A could now raise under the crowdfunding prospectus exemption will be $600,000 ($1,500,000 minus ($600,000 + $300,000)) in order to ensure compliance with the $1,500,000 offering limit for the issuer group. Investment Limits – Paragraphs 5(1) (c) and (d) [Crowdfunding prospectus exemption] impose investment limits on purchasers of securities distributed under the crowdfunding prospectus exemption. In all the jurisdictions, a purchaser that is not an accredited investor is subject to an investment limit of $2,500 per distribution and in Alberta and Ontario, such purchaser is also subject to an annual investment limit of $10,000 for all distributions made in reliance on the crowdfunding prospectus exemption in the same calendar year. In all jurisdictions, an accredited investor is subject to an investment limit of $25,000 per distribution and in Alberta and Ontario, an accredited investor is also subject to an annual investment limit of $50,000 for all distributions made in reliance on the crowdfunding prospectus exemption in the same calendar year. In Alberta and Ontario, an investor that is a permitted client is not subject to an investment limit. (2) The crowdfunding prospectus exemption is not available to an issuer if any of the conditions in subsection 5(2) [Crowdfunding prospectus exemption] apply. For example, an issuer that uses the proceeds to invest in, merge with or acquire an unspecified business, commonly referred to as a blind pool, is
excluded from using the crowdfunding prospectus exemption. Conditions for closing of the distribution
6. Concurrent distributions – Eligible securities are defined in section 1 [Definitions].
An eligible crowdfunding issuer can distribute securities under other prospectus

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 6 exemptions, such as the accredited investor exemption in section 2.3 of Regulation 45-106 or the offering memorandum exemption in section 2.9 of Regulation 45-106, during the distribution period. Securities distributed under other prospectus exemptions do not need to have the same price, terms and conditions as those distributed under the crowdfunding prospectus exemption. However, the issuer must ensure compliance with the conditions of the prospectus exemption being relied upon for the distribution. Information about any concurrent distribution, including a concurrent distribution by a member of the issuer group, must be disclosed in the crowdfunding offering document. Risk acknowledgement form – The issuer must ensure upon closing of the distribution that they receive from the funding portal a Form 45-108F2 Risk Acknowledgement (Form 45-108F2) from each purchaser in which the purchaser has positively responded to each question in Form 45-108F2. Confirmation of investment limits – In each jurisdiction other than Alberta and Ontario, the issuer must ensure upon closing of the distribution that they receive from the funding portal confirmation that the purchaser is an accredited investor if the acquisition cost is greater than $2,500. In Alberta and Ontario, the issuer must receive a Form 45-108F3 Confirmation of investment limits (Form 45-108F3) for each purchaser regardless of the acquisition cost to the purchaser. Closing of the distribution – If the closing of the distribution does not take place within 30 days of the end of the distribution period, the funding portal is required to promptly return to the purchaser all funds and assets received from a purchaser in connection with the distribution under the crowdfunding prospectus exemption. Liability for misrepresentation – reporting issuers
9. In Ontario, the crowdfunding offering document required to be filed by an issuer
under the Regulation is considered to be an offering memorandum and the rights available under section 130.1 of the Securities Act (R.S.O. 1990, c. S. 5) (Ontario) apply. Refer to Ontario Securities Commission (OSC) Rule 45-501 Ontario Prospectus and Registration Exemptions and the related Policy Statement for more information. Under
section 9 [Liability for misrepresentation – reporting issuers], an issuer must provide a
purchaser with a contractual right equivalent to the right in section 130.1 of the Securities Act (Ontario) for any materials made available to a purchaser in addition to the crowdfunding offering document, if the securities legislation of the jurisdiction in which a purchaser resides does not provide a comparable right. In Québec, the crowdfunding offering document and any other materials that are made available to purchasers by a reporting issuer are documents authorized by the Autorité des marches financiers for use in lieu of a prospectus in regards to which rights of action established in section 217 to 221 of Securities Act (chapter V-1.1) (Québec) may be exercised.

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 7 In Nova Scotia, the crowdfunding offering document required to be filed by an issuer under the Regulation is considered to be an offering memorandum and the rights available under section 138 of the Securities Act (RSNS 1989, c 418) (Nova Scotia) apply. Refer to Nova Scotia Securities Commission Rule 45-501 Statutory Liability for Misrepresentations in an Offering Memorandum Under Certain Exemptions From the Prospectus Requirement and the related Companion Policy for more information. Under
section 9 [Liability for misrepresentation – reporting issuers], an issuer must provide a
purchaser with a contractual right equivalent to the right in section 138 of the Securities Act (Nova Scotia) for any materials made available to a purchaser in addition to the crowdfunding offering document. In Alberta, a crowdfunding offering document has been designated as an offering memorandum and the rights available under the Securities Act (Alberta) apply. Refer to Alberta Securities Commission Designation Order Designation of a Crowdfunding Offering Document under Multilateral Instrument 45-108 Crowdfunding as an Offering Memorandum. Liability for untrue statement – non-reporting issuers
10. The crowdfunding offering document required to be filed by an issuer that is not a
reporting issuer must contain a contractual right of action against the issuer for rescission and damages that is available to the purchaser if the crowdfunding offering document or other permitted materials made available to the purchaser contains an untrue statement of a material fact. Advertising and general solicitation
11. An eligible crowdfunding issuer cannot advertise the distribution or solicit
purchasers, except as permitted in subsection 11(2) [Advertising and general solicitation]. An issuer may inform purchasers, including the issuer’s customers and clients, that the issuer is proposing to offer its securities under the crowdfunding prospectus exemption and refer the customers and clients to the funding portal facilitating the distribution. This direction can be provided through the use of social media or in paper format. However, in all cases, the direction must be limited to directing the purchasers, including the issuer’s customers and clients, to the funding portal’s online platform to obtain relevant information about the distribution. We anticipate that issuers will want to use social media to harness the “wisdom of the crowd” in a crowdfunding offering. Although an issuer cannot advertise the distribution or solicit purchasers, an issuer may participate in communication channels or discussion boards to encourage purchasers to discuss the crowdfunding distribution, if the funding portal establishes one. An issuer is reminded that it cannot post any statement or information on the funding portal’s online platform that is inconsistent with the crowdfunding offering document or the Regulation.

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 8 Commissions or fees
13. Section 13 [Commissions or fees] prohibits payment of a commission, finder’s fee,
referral fee or similar payment by any person in the issuer group to any person in connection with a crowdfunding distribution, other than to a funding portal. This is meant to mitigate against potential conflicts of interest. However, this restriction is not intended to prohibit payments to persons as compensation for their services to an issuer in preparing materials in connection with a crowdfunding offering, such as accounting or legal fees. DIVISION 2 Ongoing disclosure requirements for non-reporting issuers Division 2 [Ongoing disclosure requirements for non-reporting issuers] prescribes ongoing disclosure obligations for non-reporting issuers that distribute securities under the crowdfunding prospectus exemption. Non-reporting issuers are required to make available to the purchaser certain ongoing disclosure documents. These include annual financial statements, notices disclosing the use of proceeds, and in New Brunswick, Nova Scotia and Ontario, notices of specified key events. We anticipate issuers generally will choose to make these documents available to purchasers electronically. However, an issuer may also make these documents available in paper format. We expect an issuer to take reasonable steps to ensure that all purchasers receive or have access to the documents promptly. We consider ongoing disclosure documents to have been made reasonably available to each holder of a security acquired under the crowdfunding prospectus exemption if the documents are made available through the funding portal or are mailed to security holders, or if security holders receive an electronic notice that the annual financial statements, the notices disclosing the use of proceeds, and in New Brunswick, Nova Scotia and Ontario, the notices of specified key events can be viewed on a public website of the issuer or a website accessible by all holders of securities of the issuer that were acquired under the crowdfunding prospectus exemption (such as a password protected website). For reporting issuers that distribute securities under the crowdfunding prospectus exemption, all applicable continuous disclosure obligations under securities legislation continue to apply. Annual financial statements What constitutes an issuer’s first financial year? - The first financial year of an issuer commences on the date of its incorporation or organization and ends at the close of that financial year. What financial years need to be audited or reviewed? - If an issuer is required to have an auditor’s report or review report accompany its financial statements in accordance with paragraph 16(2)(a) [Annual financial statements], the financial

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 9 statements for the most recent period and the comparative period, if any, are both required to be audited or are both required to be reviewed. Statement required in annual financial statements that have not been audited or reviewed – Subsection 16(8) [Annual financial statements] requires that if an issuer’s annual financial statements are not accompanied by an auditor’s report or a review report prepared by a public accountant, the financial statements must include a statement which discloses that fact. As set out in subsection 16(2) [Annual financial statements], an issuer’s annual financial statements are not required to be audited or reviewed by a public accountant if the issuer has raised less than $250,000 under one or more prospectus exemptions from the date of its formation until the end of its most recently completed financial year. What financial reporting framework is identified in the financial statements and in any accompanying auditor’s report or review report? – If an issuer’s financial statements are prepared in accordance with Canadian GAAP for publicly accountable enterprises and include an unreserved statement of compliance with IFRS, the auditor’s report or review report must refer to IFRS as the applicable financial reporting framework. There are 2 options for referring to the financial reporting framework in the applicable financial statements and accompanying auditor’s report or review report:
(a) refer only to IFRS in the notes to the financial statements and in the auditor’s report or review report; or (b) refer to both IFRS and Canadian GAAP in the notes to the financial statements and in the auditor’s report or review report. Non-GAAP financial measures and other financial measures – An issuer that intends to disclose financial measures that are subject to Regulation 52-112 respecting Non-GAAP and Other Financial Measures Disclosure (chapter V-1.1, r. 28.1), including in its crowdfunding offering document, should refer to the requirements set out in that Regulation. Annual disclosure of use of proceeds
17. (1) Section 17 [Annual disclosure of use of proceeds] requires that an issuer’s
annual financial statements be accompanied by a notice that discloses in detail, how the gross proceeds raised by the issuer in a distribution under the crowdfunding prospectus exemption have been spent. The information in the notice is to be provided as at the date of the issuer’s most recently completed financial year. While specific disclosure is not prescribed for the notice, issuers should carefully consider whether the disclosure being provided contains sufficient detail for a security holder to understand how the proceeds have been used. For example, the level of detail expected in the notice of proceeds could include a breakdown of the amount of proceeds that were allocated to fees (including management or service provider fees), salaries or other compensation paid, asset purchases made or development costs.

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 10 If, at the date of the notice, there are funds raised by the issuer in a distribution under the crowdfunding prospectus exemption that have not been used, the notice should disclose that fact as well as the amount of the unused proceeds. The amount of the proceeds used together with the amount of unused proceeds, if any, should equal the gross proceeds raised by the issuer in the distribution under the crowdfunding prospectus exemption. We expect the actual use of the proceeds as disclosed in the notice to be consistent with the issuer’s intended use of proceeds as disclosed in the crowdfunding offering document. If the proceeds of a crowdfunding distribution have been distributed to an entity that is related to the issuer (for example, an issuer in the same corporate structure), then the issuer should provide disclosure as to how the proceeds were used by that entity. Notice of specified key events
18. In addition to annual financial statements and the notice of how the proceeds
raised under the crowdfunding prospectus exemption have been used, non-reporting issuers that issue securities in reliance on the crowdfunding prospectus exemption in New Brunswick, Nova Scotia and Ontario must also make available a notice of specified key events to each holder of a security acquired under the crowdfunding prospectus exemption, within 10 days of the occurrence of the event. These events are considered to be significant changes in the business of the issuer that purchasers should be notified of. This requirement is in addition to any similar requirement under corporate law and also applies to non-reporting issuers with non-corporate structures, such as trusts and partnerships. In making a determination as to whether an issuer’s industry has changed, issuers may consider whether they would identify a different industry category on Form 45-106F1 Report of Exempt Distribution than the category previously identified. A non-reporting issuer must continue to provide notice of the specified key events, if applicable, until the earliest of the following events: (i) the issuer becomes a reporting issuer; (ii) the issuer has completed a winding up or dissolution; (iii) the securities of the issuer are beneficially owned, directly or indirectly, by fewer than 51 security holders worldwide.
PART 3
REQUIREMENTS FOR FUNDING PORTALS
DIVISION 1
Registration requirements, general
Division 1 [Registration requirements, general] sets out the registration requirements for both a restricted dealer funding portal and a registered dealer funding portal.

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 11 Restricted dealer funding portal
21. A restricted dealer funding portal and a registered individual of a restricted dealer
funding portal must comply with the requirements set out in Part 3.
Although a restricted dealer funding portal is not required to comply with
section 13.3 of Regulation 31-103 or collect client specific know your client information as
contemplated by paragraph 13.2(2)(c) of Regulation 31-103, a restricted dealer funding portal is still required to establish the identity of, and to conduct due diligence on its clients under the general know-your-client obligation set out in section 13.2 of Regulation 31-103. Registered dealer funding portal
22. A crowdfunding distribution must be made through a single funding portal. A
registered dealer who currently distributes securities online under other prospectus exemptions, such as the accredited investor exemption in section 2.3 of Regulation 45- 106 or the offering memorandum exemption in section 2.9 of Regulation 45-106, will already have in place the infrastructure required to facilitate distributions of securities under the crowdfunding prospectus exemption through an online platform. However, these registered dealers will be required to ensure they have the necessary policies and procedures in place to comply with Part 3, as applicable. For those registered dealers who do not currently distribute securities online and intend to use the crowdfunding prospectus exemption, they must establish an online funding portal to distribute the securities under the crowdfunding prospectus exemption in accordance with the Regulation. A registered dealer that proposes to distribute securities under the Regulation must file a Form 33-109F5 Change of Registration Information that describes the change in its business operations. DIVISION 2 Registration requirements, funding portals General Although a funding portal enters into a contractual relationship with an eligible crowdfunding issuer, the funding portal also has a relationship with a purchaser investing through the funding portal. These purchasers are clients of the funding portal. A funding portal and its registered individuals must deal fairly, honestly and in good faith with a purchaser. This is consistent with the obligation imposed on all registered dealers and advisers under securities legislation. As a registrant, we expect a funding portal to follow the letter of the law and also the spirit of the law. For example, a funding portal that requires a purchaser to sign an agreement that contains an inappropriate waiver of liability or that attempts to transfer its responsibilities to the purchaser, is engaging in conduct that is not consistent with the principle of dealing fairly, honestly and in good faith with a purchaser.

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 12 A funding portal must be aware of and act in compliance with the terms of the exemption being relied upon for the trade or distribution of the security. For example, the funding portal must confirm and validate that the purchaser is investing within the investment limits set out in the Regulation. Restricted dealing activities
23. (1) Section 23 [Restricted dealing activities] provides that a funding portal and a
registered individual of a funding portal must not allow an issuer access to the funding portal if the issuer is a “related issuer” of the funding portal. The definition of a “related issuer” is described in Regulation 33-105 respecting Underwriting Conflicts (chapter V-1.1, r. 11) (Regulation 33-105) and generally refers to a situation where there is cross￾ownership between an issuer and a registrant. Subsection 1.2(2) of Regulation 33-105 provides that an entity is a related issuer to another entity if one of them is an “influential security holder” of the other or if each of them is a related issuer of the same third party. If a funding portal proposes to allow an issuer that is a connected issuer access to the funding portal, the funding portal should ensure that the issuer’s offering documents include the disclosure required by Appendix C to Regulation 33-105. The definition of a “connected issuer” is described in Regulation 33-105 and generally refers to a situation where an issuer may not be a related issuer of the registrant, but has some other relationship with the registrant that would cause a reasonable investor to question whether the registrant and the issuer are independent of each other for purposes of the distribution. Refer to Regulation 33-105 and the related guidance in Policy Statement to Regulation 33-105 respecting Underwriting Conflicts (Decision 2005-PDG-0274, 2005-08-24) for more information. (2) A funding portal may accept securities of an issuer as payment of portal access fees or other similar fees, provided that the payment by the issuer does not result in the funding portal holding securities of the issuer that exceed the limit set out in subsection 23(2) [Restricted dealing activities]. However, an investment by a funding portal in an issuer that intends to distribute securities through the funding portal, including an investment in the form of securities accepted as payment for fees, may give rise to a conflict of interest. Accordingly, we expect the funding portal to comply with the conflicts of interest provisions in Division 2 of Part 13 of Regulation 31-103 and related provisions in Policy Statement 31-103. Advertising and general solicitation
24. A funding portal cannot advertise the distribution or solicit purchasers, except as
permitted in subsection 24(2) [Advertising and general solicitation]. Any solicitation or marketing activities, either in print or electronic form that targets specific individuals in connection with a distribution under the crowdfunding prospectus exemption would be a contravention of section 24 [Advertising and general solicitation]. A funding portal is not permitted to recommend or endorse a particular issuer or distribution, which includes accepting payment or other benefits from an issuer to highlight

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 13 or showcase the issuer or its distribution. Such conduct would be considered to be inconsistent with the restriction in section 24 [Advertising and general solicitation]. However, a funding portal may advertise its business operations. For example, a funding portal may advertise that it is in the business of distributing securities under the crowdfunding prospectus exemption. Access to funding portal
25. Section 25 [Access to funding portal] requires a funding portal to obtain a
Form 45-108F5 Personal Information Form and Authorization to Collect, Use and Disclose Personal Information (Form 45-108F5) from each director, executive officer and promoter of an issuer prior to allowing the issuer access to the funding portal for the purposes of posting a distribution. Funding portals should ensure all questions in Form 45-108F5 have been answered and additional details provided, where necessary. At a minimum, we expect the following checks to be conducted by a funding portal:
(a) regarding issuers:
(i) the existence of the issuer and its business registration, including a review of the issuer’s constating documents; (ii) securities and disciplinary enforcement history checks; (iii) bankruptcy check; and (iv) court record check, where available; and (b) regarding directors, executive officers and promoters of the issuer:
(i) criminal record and securities and disciplinary enforcement history checks; (ii) bankruptcy check; and (iii) court record check, where available. While we have outlined the minimum steps we expect a funding portal to take in conducting background checks on the issuer and criminal records and background checks on each director, executive officer and promoter of the issuer, a registered dealer funding portal must also take steps to ensure compliance with its regulatory obligations under securities legislation. For example, we would not consider the minimum checks and requirements outlined in this section by a registered dealer funding portal to be adequate compliance with its know-your-product obligation.

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 14 A funding portal may retain a third party to perform these checks. However, the funding portal is responsible and accountable for all functions that it outsources to a third party. A funding portal should have a written agreement that sets out the responsibilities of the parties to the arrangement. A funding portal should consider the guidance provided in Part 11 of Policy Statement 31-103 on outsourcing. Issuer access agreement
26. We expect the funding portal and the issuer to enter into a written agreement that
sets out all material terms and conditions of the arrangement under which a funding portal will grant the issuer access to its online platform. Although section 26 [Issuer access agreement] prescribes certain minimum requirements that must be included in an issuer access agreement, we encourage the funding portal and the issuer to also set out other key terms and conditions that will govern the arrangement. Obligation to review materials of eligible crowdfunding issuer
27. (2) If, after reviewing the crowdfunding offering document, the materials referred
to in subsection 12(1) [Additional distribution materials], the personal information forms, the results of the criminal record and background checks, and any other information about the issuer or the distribution made available to the funding portal or of which the funding portal is aware, the funding portal determines the disclosure in the crowdfunding offering document and other materials referred to in subsection 12(1) [Additional distribution materials] is incorrect, incomplete or misleading, it must require the issuer to correct, complete or clarify the disclosure in the crowdfunding offering document and other permitted materials prior to posting on the funding portal’s online platform. For example:
(a) if an issuer’s constating documents indicate that the “common shares” contain restrictions on voting or contain redemption rights that allow the issuer to redeem the shares in certain circumstances, or that insiders or promoters of the issuer hold another class of securities that have multiple votes, and the crowdfunding offering document does not contain this disclosure, the funding portal must not grant the issuer access to the funding portal for the purposes of distributing its securities until it is satisfied that the crowdfunding offering document accurately describes the securities being distributed, the capital structure of the issuer, including the percentage ownership of the outstanding securities of the issuer held by the insiders and promoters, and any rights not otherwise available to purchasers; (b) if an issuer is part of an issuer group, and the issuer’s interest in the business or the assets of the business are owned through one or more subsidiaries, the funding portal should understand the features and risks of the capital structure of the issuer group and assess whether the issuer’s disclosures adequately discloses these risks. Nothing in the Regulation prevents a funding portal from establishing additional criteria that an issuer must satisfy or meet in order to distribute its securities through the funding portal. A funding portal should establish additional criteria or due

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 15 diligence checks to grant or deny access by an issuer to its online platform for any reason, including any concern of the funding portal that:
(a) the issuer may not be financially responsible in the conduct of its business; or (b) the issuer has not complied with, or is not complying with, securities legislation or the undertakings, terms and conditions agreed to by the issuer in connection with a distribution under the crowdfunding prospectus exemption or otherwise. Denial of issuer access and termination
28. (1) Funding portals are expected to play a gatekeeper role in attempting to
ensure that issuers comply with the requirements of the crowdfunding prospectus exemption and to maintain the integrity of the capital markets. We expect funding portals to have policies and procedures in place to carry out their gatekeeper function, including measures to reduce the risk of fraud in securities-based crowdfunding. These policies and procedures should include the steps a funding portal follows to review and assess the issuer, the distribution, the crowdfunding offering document and the materials described in subsection 12(1) [Additional distribution materials]. At a minimum, we expect a funding portal to:

• establish the identity of an issuer, such as obtaining and reviewing the
  issuer’s articles of incorporation or other constating documents;
• determine the nature of the issuer’s business; and
• review the responses provided in Form 45-108F5 and the results of
  the criminal record and background checks.
  If, after reviewing the information provided to the funding portal under the Regulation and any other information about the issuer or the distribution made available to the funding portal or of which the funding portal is aware, the funding portal identifies any discrepancies or causes for concern about an issuer, its directors, executive officers or promoters, the distribution, the crowdfunding offering document or the materials described in subsection 12(1) [Additional distribution materials], the funding portal must make all reasonable inquiries to resolve the discrepancies or concerns. This may include asking additional questions of the issuer and its management and ensuring the answers provided resolve the concern to the satisfaction of the funding portal or obtaining and reviewing additional documentation. We expect the funding portal to consider the discrepancy or concern in its determination as to whether or not to grant an issuer access to its online platform. We expect a funding portal to deny access to an issuer if based on the information the funding portal has, it appears to the funding portal that the issuer has not satisfied the conditions in subsection 28(1) [Denial of issuer access and termination]. For example, if it appears to the funding portal that upon a good faith determination the

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 16 business of the issuer may not be conducted with integrity, including where the funding portal believes the issuer or the distribution is part of a scheme to defraud investors, the funding portal must deny the issuer access. If certain executive officers of the issuer reside in a jurisdiction where background checks and securities and disciplinary enforcement history checks are not readily available to the funding portal, it may determine that it is unable to assess whether the business of the issuer will be conducted with integrity, and thus must deny the issuer access to its platform. Monitoring purchaser communications
32. A funding portal that establishes an online communication channel, such as a blog
or chat room, should have detailed written policies and procedures that outline the steps the funding portal will take to ensure compliance with section 32 [Monitoring purchaser communications]. For example, a funding portal may require issuers and purchasers to register to use the online communication channel and each will be assigned a user code or client identifier that enables the funding portal to track the communications of each participant. If, for example, a purchaser makes an incorrect statement on the blog that the price per share is too high at $50, when the crowdfunding offering document states the price per share is $10, the funding portal would not be required to remove the statement. However, the issuer would be permitted to correct the price through a statement on the blog that the price per share is $10. If, in another example, an issuer makes a statement on the blog that describes how its product works and that information was not disclosed in the crowdfunding offering document, then the funding portal must remove the statement as it is inconsistent with the crowdfunding offering document. However, in this example, an issuer could make a clarifying statement as to how its product works, if necessary, to address a misconception or misunderstanding expressed by a purchaser on the blog. Online platform acknowledgement
33. Prior to a person entering a funding portal’s online platform, the funding portal must
take reasonable steps to confirm that the person understands the risks of investing in securities posted on the funding portal and is advised whether they will or will not receive suitability advice depending on the type of dealer operating the funding portal. We expect that these acknowledgements will be completed electronically through the funding portal and that the funding portal’s books and records will include evidence that the funding portal has satisfied this obligation. Purchaser requirements prior to purchase
34. Prior to a purchaser entering into an agreement to purchase securities under the
crowdfunding prospectus exemption, a funding portal must obtain from a purchaser:
(a) a risk acknowledgment form in which the purchaser has positively answered all questions;

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 17 (b) except in Alberta and Ontario, confirmation and validation that the purchaser is an accredited investor if the acquisition cost is greater than $2,500; and (c) in Alberta and Ontario, a confirmation of investment limits form and validation of the information contained in the form regardless of the acquisition cost to the purchaser. A funding portal must not permit a purchaser to acquire securities of the issuer if the purchaser has responded negatively to any of the questions in the risk acknowledgement form. We anticipate that (a) the risk acknowledgement form, (b) the confirmation and validation of the purchaser’s investor status, and (c) where applicable, the confirmation of investment limits form will be completed online through the funding portal facilitating the distribution. A funding portal should take reasonable steps to confirm that each purchaser proposing to participate in a crowdfunding distribution through its online platform understands and complies with the applicable investment limits. A funding portal must have appropriate policies and procedures in place to confirm and verify the purchaser’s investor status, the applicable investment limits and whether the purchaser is in compliance with the applicable investment limits. In Ontario, these procedures must include obtaining a Form 45-108F3 from the purchaser prior to accepting any funds from the purchaser. The funding portal should review the risk acknowledgement form and in Alberta and Ontario, also review the confirmation of investment limits form to ensure they have been properly completed and executed. If a purchaser specifies that it is an accredited investor or a permitted client, the funding portal will have to obtain further information from the purchaser in order to determine whether the purchaser has the requisite income or assets to meet the terms of the accredited investor or permitted client definition. DIVISION 3 Additional requirements, restricted dealer funding portal Prohibition on providing recommendations or advice
39. Section 39 [Prohibition on providing recommendations or advice] provides that a
restricted dealer funding portal and a registered individual of the restricted dealer funding portal must not provide a recommendation or advice to a purchaser in connection with a distribution under the crowdfunding prospectus exemption or other trades in a security. This means a restricted dealer funding portal cannot tell a purchaser that the securities are a good investment, that the securities meet the purchaser’s investment needs or objectives, or that the purchaser should, for whatever reason, buy the securities. Some activities may be considered bona fide activities of a restricted dealer funding portal provided that a reasonable person would not construe those activities to be the restricted dealer funding portal providing a recommendation or advice to a purchaser. These activities could include:

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 18 (a) using objective criteria to limit the crowdfunding distributions on the funding portal if the objective criteria are disclosed on the funding portal and applied consistently to all distributions on the funding portal; (b) providing general information and educational materials to purchasers about crowdfunding distributions if the information is presented in a fair, balanced and reasonable manner; (c) providing search functions or other tools for purchasers to search, sort or categorize crowdfunding distributions available on the funding portal if the search functions are based on objective criteria; (d) distributing information on the funding portal about a particular issuer or offering to a purchaser based on selection criteria identified by a purchaser; and (e) providing communication channels or discussion boards to enable purchasers in a crowdfunding distribution to communicate with one another and with representatives of the issuer about a crowdfunding distribution displayed on the funding portal if a communication by a person can be traced back to its author and the funding portal complies with its obligations in section 32 [Monitoring purchaser communication]. Restriction on Lending – A restricted dealer funding portal must comply with
section 13.12 of Regulation 31-103 which provides that a registrant must not lend money,
extend credit or provide margin to a client. Further, paragraph 39(b) [Prohibition on providing recommendations or advice] provides that a restricted dealer funding portal must not recommend that a purchaser use borrowed money to finance any part of the purchase of securities of the issuer under the crowdfunding prospectus exemption. This activity creates a conflict of interest which cannot be properly managed. To the extent that products sold to a purchaser are structured in a way that results in the restricted dealer funding portal becoming a lender to the purchaser, we will consider the restricted dealer funding portal not to be in compliance with the prohibition in section
13.12 of Regulation 31-103.
Permitted dealing activities
41. Section 41 [Permitted dealing activities] provides that a restricted dealer funding
portal and a registered individual of the restricted dealer funding portal may only act as an intermediary in connection with a distribution of securities made in reliance on the crowdfunding prospectus exemption and, except in Ontario, a distribution of securities made in reliance on a start-up crowdfunding registration and prospectus exemptive relief order granted by a securities regulatory authority or regulator. In addition, in Alberta, a restricted dealer funding portal and a registered individual of the restricted dealer funding portal may act as an intermediary in connection with a distribution of securities under ASC Rule 45-517 Prospectus Exemption for Start-up Businesses. This means that a restricted dealer funding portal is not permitted to engage in a broader range of dealing or advising activities, such as

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 19 (a) facilitating distributions of securities in reliance on other prospectus exemptions, (b) facilitating resales of securities acquired by a purchaser to accredited investors or to other purchasers who are eligible to purchase securities on a prospectus￾exempt basis, or (c) providing underwriting or underwriting-related services to issuers except as otherwise permitted by the Regulation. The limitation on dealing activities applies only to activities in connection with a distribution of securities under the crowdfunding prospectus exemption and, except in Ontario, a distribution of securities under a start-up crowdfunding exemptive relief order granted by a securities regulatory authority or regulator. In Alberta, it also applies a distribution of securities under ASC Rule 45-517 Prospectus Exemption for Start-up Businesses. A funding portal may engage in other types of crowdfunding activities that do not involve a distribution of securities, including facilitating crowdfunding activities based on a donation model, a reward model or a pre-purchase model. To the extent that a funding portal does engage in crowdfunding activities that do not involve a distribution of securities, it should have separate books and records for its non-securities related crowdfunding activities. Chief Compliance Officer
42. A restricted dealer funding portal is required to have a UDP and a CCO. The UDP
and the CCO can be the same person if they meet the requirements for both registration categories. We prefer funding portals to separate these functions, but we recognize that for a restricted dealer funding portal, it might not be practical.
Section 42 [Chief compliance officer] sets out the proficiency requirements for a
CCO of a restricted dealer funding portal. The securities regulatory authority or regulator is required to determine an individual’s fitness for registration and may exercise discretion in so doing. The securities regulatory authority or regulator may grant an exemption from any of the education requirements in paragraphs 42(a) and (b) [Chief compliance officer] for the CCO of a restricted dealer funding portal if it is satisfied that the individual has qualifications or relevant experience that are equivalent to, or more relevant in the circumstances than, the prescribed requirements. The experience requirement in paragraph 42(c) [Chief compliance officer] may include experience acquired:

• during employment as or with a registered dealer, a registered adviser or
  an investment fund manager;
• in related investment fields, such as investment banking, advisory services,
  venture capital or private equity;

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 20

• in legal, accounting or consulting practices; or
• in other professional fields that relate to capital raising business activities.
  Proficiency

43. Section 43 [Proficiency] requires an individual of a restricted dealer funding portal
    to have the education, training and experience, among other things, to understand the structure, features and risks of the distribution. At a minimum, to comply with the proficiency requirements set out in section 43 [Proficiency], we expect a restricted dealer funding portal to review and assess the crowdfunding offering document, the materials referred to in subsection 12(1) [Additional distribution materials], the issuer’s articles of incorporation and other constating documents. The restricted dealer funding portal must be able to evidence their review of the information provided by the issuer. If the information provided by the issuer is not sufficient to enable the restricted dealer funding portal to understand the structure, features and risks of the distribution, the funding portal must make further inquiries with the issuer to satisfy the proficiency requirement. Examples of the structure, features and risks of the distribution include:

• return on the investment;
• fee structure;
• time horizon;
• liquidity risk;
• conflict of interest risk; and
• issuer’s financial position.
  MISCELLANEOUS
  Resale of securities distributed under the crowdfunding prospectus exemption Securities acquired under the crowdfunding prospectus exemption are subject to resale restrictions. Securities of a reporting issuer acquired under the crowdfunding prospectus exemption are subject to a 4-month hold period. Securities of a non-reporting issuer cannot be resold in a jurisdiction:
  (a) until the issuer becomes a reporting issuer and certain other conditions are met; or (b) unless the sale is made under another available prospectus exemption.

POLICY STATEMENT IN FORCE FROM AUGUST 25, 2021 TO JUNE 8, 2023 Policy Statement to Regulation 45-108 August 25, 2021 Page 21 The crowdfunding prospectus exemption is not available for distributions by selling security holders. Refer to Regulation 45-102 respecting Resale of Securities (chapter V-1.1, r. 20). Décision 2015-PDG-0201, 2015-12-07 Bulletin de l’Autorité: 2016-01-21, Vol. 13, n° 3. Amendments CSA Staff Notice 11-334 Bulletin de l’Autorité : 2017-01-19, Vol. 14 n° 2 Decision 2021-PDG-0036, 2021-06-30 Bulletin de l’Autorité: 2021-08-05, Vol. 18, n° 31.