Crowdfunding has started to take ground in Asia as well and the countries in the region are reacting to this innovation quite promptly. After India and Japan, it’s now Malaysia’s turn, which just released a set of drafted rules for equity crowdfunding.
The Malaysian Securities Commission drafted a regulation for securities crowdfunding, looking closely at what countries like Australia, New Zealand and the USA have done in this regard. The proposed rules are now undergoing a period of public consultation, which will end on the 5th of September 2014. But let’s take a closer look to what the Malaysian Securities Commission (MSC) proposed.
The platforms
Malaysian equity crowdfunding platforms have to register under the Registered Electronic Facility (REF) framework, demonstrating they have enough resources to run such kind of business. Foreign platforms are also allowed to register as regulated players,provided they incorporate a local entity. While the drafted regulation allows the platforms to do and perform core activities, such as offerings hosting, and some ancillary services, such as screening and investor relations, it does not permit them to
The issuers
MSC proposes that any private company may use equity crowdfunding to raise capital, except investment funds, financial institutions, public listed companies and their subsidiaries and companies that already raised RM 5 million through the financial source in discussion. Also in this case a cap on the amount that can be raised has been proposed: RM 3 million in a 12 month period and RM 5 million in the company’s lifetime. The latter is a novelty compared to other countries’ regulations we have seen before.
Issuers have to provide a disclosure document to be listed on a equity crowdfunding platforms. However this does not always have to contain financial information, for instance for offerings below RM 300,000.
The investors
Investment through equity crowdfunding platforms is open to anyone. However, MSC distinguishes between two investor categories:
MSC has done a good job on the paper drafting the regulation, as it bench-marked other countries’ best practices, trying to adapt them to the Malaysian context. On the field, let’s see if the regulation are good enough to help kick-starting a flourishing local securities crowdfunding scene.
References
Proposed Regulatory Framework for Equity Crowdfunding (2014). Securities Commission Malaysia. http://www.sc.com.my/
Image credit to: Eric Teoh http://bit.ly/1rzlt3v
The platforms
Malaysian equity crowdfunding platforms have to register under the Registered Electronic Facility (REF) framework, demonstrating they have enough resources to run such kind of business. Foreign platforms are also allowed to register as regulated players,provided they incorporate a local entity. While the drafted regulation allows the platforms to do and perform core activities, such as offerings hosting, and some ancillary services, such as screening and investor relations, it does not permit them to
- Feature any trending pitches;
- Offer investment advice;
- Negotiate terms for and on behalf of third parties;
- Compensate its employees, agents or other persons for the solicitation/sale of securities on its ECF platform.
The issuers
MSC proposes that any private company may use equity crowdfunding to raise capital, except investment funds, financial institutions, public listed companies and their subsidiaries and companies that already raised RM 5 million through the financial source in discussion. Also in this case a cap on the amount that can be raised has been proposed: RM 3 million in a 12 month period and RM 5 million in the company’s lifetime. The latter is a novelty compared to other countries’ regulations we have seen before.
Issuers have to provide a disclosure document to be listed on a equity crowdfunding platforms. However this does not always have to contain financial information, for instance for offerings below RM 300,000.
The investors
Investment through equity crowdfunding platforms is open to anyone. However, MSC distinguishes between two investor categories:
- sophisticated investors, which comprises accredited and high-net worth individuals or entities, who do not have any restriction on the amount they can invest;
- retail investors, which includes all the investors that do not enter in the former category, have instead a limit set at RM 3000 per offering and a maximum of RM 30,000 in one year.
MSC has done a good job on the paper drafting the regulation, as it bench-marked other countries’ best practices, trying to adapt them to the Malaysian context. On the field, let’s see if the regulation are good enough to help kick-starting a flourishing local securities crowdfunding scene.
References
Proposed Regulatory Framework for Equity Crowdfunding (2014). Securities Commission Malaysia. http://www.sc.com.my/
Image credit to: Eric Teoh http://bit.ly/1rzlt3v
About the author - Irene Tordera
Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.
During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.
Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.
During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.
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