Malaysia has been one of the more proactive countries in the Asian region to push forward with researching the crowdfunding space and moving forward with a regulatory approach. Last August SC Malaysia organized a crowdfunding conference to open up the discussion on the benefits and challenges for crowdfunding and capital formation. The gathering saw the support and participation of Datuk Ranjit Ajit Singh, the SC Chairman. Guidelines on the regulation of of equity crowdfunding platforms were released in February of 2015.
The Guidelines require the operator’s board of directors to be fit and proper and have the ability to operate an orderly, fair and transparent market. As the operator plays a critical role in ensuring confidence in the crowdfunding platform, the published rules entrust the operator with obligations to ensure issuers’ compliance with platform rules. The operator may deny an issuer access to its platform if it is of the view that the issuer or the proposed offering is not suitable to be hosted on the platform. The operator is also required to ensure that funds obtained from investors are safeguarded in a trust account until the funding goal is met.
The framework allows an eligible issuer to raise up to RM 3 million within a 12-month period. Issuers will be able to tap on investments from retail, sophisticated as well as angel investors, subject to the investment limits as provided in the Guidelines. Investors are given a 6-day cooling off period, within which they may withdraw the full amount of their investment. In addition, if there is any material adverse change relating to an issuer, the investors must be notified of such change. The investors will be given the option to withdraw their investment if they choose to do so within 14 days after the said notification.
On April 10th the Commission stated that interested companies may submit applications for either equity crowdfunding sites or Shariah compliant equity crowdfunding platforms. These platforms are expected to enable start-ups and SMEs to obtain capital through small equity investments from relatively large numbers of investors, using new funding platforms. Applications must be submitted by May 11th, 2015 to be considered, according to the release.
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