MAS seeks feedback for securities-based crowd-funding

SINGAPORE - The Monetary Authority of Singapore (MAS) is looking at making it easier for companies to access alternative sources of funding through securities-based crowdfunding.

The financial regulator issued a consultation paper today (Feb 16) setting out proposals for this form of funding. Raising funds through crowdfunding has been gaining popularity among start-ups and small and medium sized enterprises (SMEs).

There are two broad models of crowdfunding – community and financial return. Community crowdfunding is usually non-investment funding, for example, through donations or rewards. This does not involve the offer of securities nor offer the prospect of financial returns and is not subject to securities regulation.

On the other hand, the financial return model includes lending-based and equity-based crowdfunding. It involves the offer of securities in the form of debentures or shares and is subject to securities regulation.

To facilitate securities-based crowdfunding (SCF), MAS plans to open this scheme to accredited investors and institutional investors, for a start.

Accredited investors are individuals whose net personal assets are in excess of S$2 million and corporations with net assets exceeding S$10 million in value. Institutional investors include, among others, sovereign wealth funds, government agencies, pension funds and financial institutions.

MAS is also proposing to ease the financial requirements for intermediaries that deal in securities, such as SCF platform operators. This will allow potential SCF platform operators with lower financial resources to apply for a licence to offer SCF investments.

However, these intermediaries must not handle or hold customer monies, assets or positions and do not act as principal in transactions with customers.

In the proposal, MAS says it will not prohibit SCF platform operators to advertise their platforms as long as they do not make reference to any specific SCF offer listed on their platforms.

MAS’ Assistant Managing Director, Capital Markets, Mr Lee Boon Ngiap said: “These proposals seek to strike a balance between facilitating investments in start-ups and small businesses and ensuring that there are sufficient safeguards for investors.”

Interested parties can submit their comments to MAS by March 18. - CHANNEL NEWSASIA