Malaysia Releases Guidelines for Equity Crowdfunding Platforms

After adopting a legislation for online investing last October, Malaysia’s Securities Commission (SC) has now released guidelines for equity crowdfunding portals. In particular, the guidelines for equity crowdfunding platforms come on top of those developed for registered electronic facilities (REF), that is any “electronic facility where the component parts when taken together, is a stock market or derivatives market”.

In fact, equity crowdfunding portals shall comply with all those requirements that apply to REFs, which include among others the following:

• meeting fairness, transparency and responsibility requirements for registering as a REF with SC.
• making satisfactory provisions concerning the protection of investors and public interest; proper functioning of the market; fairness and transparency; the management of any conflict of interest that may arise; the fair treatment of its members or any person who applies for its membership.
• having sufficient financial and human resources for operation of the REF.
  
• appointing at least one responsible person that either is the CEO or is primarily responsible for financial management.
  
• submitting to SC an annual compliance report and the latest financial statements.
  

In addition to the above guidelines, equity crowdfunding portals shall also comply to other requirements designed specifically for them, which includes:

• carrying out a due diligence exercise on prospective issuers;
  
• monitoring the conduct of issuers and take action against misconduct;
  
• carrying out investor education programmes;
  
• verifying that  issuer’s disclosure document is accurate and made accessible to investors through the platform;
  
• establishing a framework which sets out policies and procedures to effectively and efficiently manage conflicts of interest
  
• respecting the prohibition of providing financial advice to the investors.
  
  

All these guidelines apply also to portals that are not based in Malaysia but operate in the country that target local investors.

For more details and guidelines, see the document below.  

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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.