The Dubai Financial Services Authority (DFSA) announced the enactment of a regulatory regime designed to engender a robust crowdfunding ecosystem for the country. The new regulations are part of a strategy to foster an innovation driven economy. Empowering entrepreneurs and startups by providing the access to capital they must have. DFSA specifically pointed to the importance of small business for the local economy.
But what is hidden in the crowdfunding rules? First of all, the new rules are designed to regulate both debt and equity crowdfunding offers. As in the UK, crowdfunding is a blanket term that includes peer to peer lending platforms.
As for the specifics of the rules you may view them here. A DFSA representative guided us to this section of their web site and indicated that Appendixes 1 through 7 include the details of the new rules.
At a high level, crowdfunding offers are capped at $5 million. This is in line with the UK but far higher than Reg CF in the US. But then Dubai has crafted a single regime, more in line with the UK. You may view how Dubai defines an exempt offering here.
As for investor limits, a retail investor may lend nor more than $5000 to a single borrower. In any given calendar year, an investor may lend in total $50,000.
Regarding equity crowdfunding offers, an Investment Crowdfunding Operator must maintain effective systems and controls to ensure that a retail client does not invest more than $50,000 in total in any calendar year using its service.
An Investment Crowdfunding Operator must ensure that a Retail Client provides a signed risk acknowledgement form for each Investment that it makes using the platform. Basically, they need to understand their money is at risk. All of it. But that is how investing works: level of risk vs. potential for return.
The DFSA Rulebook, Conduct of Business Module, that includes crowdfunding rules is embedded below.[scribd id=355287390 key=key-KNhBWWdpB6qozwtdH1YQ mode=scroll]