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Green bonds. Usage-based car insurance. Utility-scale energy storage. Ontario has made some significant progress over the past few months on a number of sustainability fronts.

Its latest step forward? The Ontario Securities Commission has proposed rules for equity crowdfunding that could prove beneficial to social and eco-minded ventures in search of capital.

To date, Canadian ventures looking to raise money through crowdfunding have been limited to seeking donations (in exchange for a reward) through sites such as Indiegogo or Kickstarter. Ontario’s securities regulator is looking to change that. After lengthy consultation, it has proposed prospectus exemptions that would allow startups to raise money in exchange for equity.

“Once finalized, the crowdfunding exemption would be a game-changer for small and medium-sized businesses looking for venture capital,” according to a commentary from Andrea Johnson and Andre Garber, securities lawyers for Dentons LLP. They added that crowdfunding would “broaden the pool of prospective investors.”

While using Internet crowdfunding would create efficiencies and lower the barrier – and cost – for private or public companies incorporated and based in Canada, no company would be permitted to raise more than $1.5 million in a given calendar year.

Investors, meanwhile, would be limited to $2,500 per investment and $10,000 for all investments over a calendar year. The crowdfunding site or portal used would have to be registered with the regulator as a “restricted dealer” and social media could be used to drive traffic to online fundraising pages.

Interested observers, including those in Canada’s social and environmental finance community, have until June 18 to comment on the regulator’s proposal.

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