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The Monetary Authority of Singapore (MAS) on Wednesday announced changes to make it easier for startups and small and medium enterprises (SMEs) looking to raise funds via securities-based crowdfunding (SCF) platforms.
MAS said it will simplify checks for SCF platform operators to rely on the existing regulatory framework for small offers to raise funds, including from retail investors.
Under current rules, issuers raising less than $5 million within 12 months are not required to issue a prospectus. However, they have to document and disclose the key risks of SCF investments, and obtain investors’ acknowledgement that they have read and understood these risks.
In addition, MAS said it will reduce the financial requirements for SCF platform operators who want to raise funds through SCF only from accredited and institutional investors.
MAS will ease the financial requirements for these platform operators to be licensed as dealing intermediaries, as long as they do not handle or hold customer monies, assets or positions, and do not act as principal against their customers.
Both the base capital requirement and minimum operational risk requirement for such intermediaries will be reduced to $50,000, from the previously required $250,000. MAS will also remove a requirement for a $100,000 security deposit.
This will allow more qualifying SCF platform operators to operate in this restricted space and takes into account the limited systemic and business conduct risks posed by such intermediaries, MAS said in its statement.
In addition, MAS said it will publish new guidelines on SCF-related advertising and answers to frequently asked questions on lending-based crowdfunding.
“Securities-based crowdfunding is a useful addition to our financing landscape,” says Lee Boon Ngiap, MAS’ Assistant Managing Director of Capital Markets.
“At the same time, SCF investments can be quite risky. The measures we are implementing seek to strike the right balance between improving access to SCF for start-ups and SMEs and protecting investor interests,” Lee adds.
This article first appeared in The Edge Singapore Market Report.