A priori, have you ever experienced a situation where you had to seek funding in crowdfunding for your project? When you find yourself in a precarious position, you look for solutions. Those that could calm or solve the problem you are experiencing.
However, sometimes you get wet, especially when money is at stake.
I sometimes receive calls from individuals who have joined specific organizations to build on a plan B. This solution could help them overcome the ordeal they are experiencing or satisfy any desire.
Today, in this article, I will tell you about two legal solutions and two problems that could put you in breach of the law.
When we talk about money, some laws govern it, and many will circumvent them to get rich.
First, let’s talk about the two issues behind a good cause.
Choose the pyramid in your search for financing.
Sometimes, specific opportunities naturally come your way when looking for financing. Hence the choice to adhere or not to this solution.
Most of the time, you face determining whether this choice is the right one for your search for financing.
Your friend or acquaintance calls you and tells you that he has to talk to you because he has something extraordinary happening to him, and he would like you to talk about it.
What are you doing?
Since you are looking for funding, you are tempted to learn more about his splendid opportunity. But, instead, you tell yourself that there are no coincidences, only encounters.
In addition, you justify the fact that you have absolute confidence in your friend.
Unfortunately, you will find yourself in a disguised multi-level pyramid in many cases.
And it isn’t easy to pinpoint the difference between the multiple legal levels and the pyramid. So, all in all, before joining any of these types of organizations, get informed. This way, you won’t lose money, and it will save you from a breach.
The level of government that manages everything related to the pyramid and multiple levels is the Competition Bureau.
Or, in particular, get in touch with them by phone. Then, you will no longer be in the uncertainty that you could compromise your search for financing.
Do you know the tontine?
Tontine is a little-known practice in Canada and especially in Quebec. These groups of individuals use the tontine as a means of collective investment. By pooling funds for several years, they can lend this money to members of the group for the realization of a project.
If your search for financing stops on this opportunity, beware.
This type of practice is illegal in Canada. According to the FMA (Financial Markets Authority), this use is similar to an investment contract under Article 1 of the Securities Law.
So, if your search for financing falls on this tradition from Italy and is widely used in Africa, tell yourself that you will be in violation in Canada.
However, if you are unsure of this tradition, don’t hesitate to contact the FMA, who will provide you with more information.
Crowdfunding is a great solution.
On the other hand, crowdfunding will be an excellent solution in your search for financing, depending on your project. That will allow you to ask for donations from each person in the company by offering them a product of equal value to the contribution in return if it is for a company. Or for an individual to receive donations out of generosity without compensation.
This usage has been common in Canada for several years, but the trend started in 2016-2017.
You will see more and more organizations, businesses, and individuals soliciting donations to finance their projects.
In short, inform yourself before doing this search for financing. Being in the void of information can cause a problem. So, it is better to be vigilant before joining something you consider an opportunity.
Have you read the article on what is crowdfunding? It might interest you.