The Philippine Securities and Exchange Commission (SEC) now allows crowdfunding platforms to register as official gatekeepers of qualified institutional and individual investors, a move that forms part of the government’s efforts to bolster the capital market.
This development stems from the SEC’s latest issuance, Memorandum Circular 12, Series of 2023, which amends the implementing rules and regulations (IRR) of the Securities Regulation Code (SRC).
With this amendment, registered crowdfunding portals are now included in the list of authorized registrars, provided they meet the stringent requirements set forth in the SRC IRR. This marks a departure from the previous regulation, which permitted only traditional financial intermediaries to serve as registrars under the SRC IRR.
Crowdfunding portals, as newly authorized registrars, can independently validate potential investors as qualified buyers, eliminating the dependency on external institutions for this process.
SEC Chairperson Emilio Aquino emphasizes that this measure simplifies access to alternative investment avenues for qualified investors, aligning with the SEC’s objective to diversify funding sources and investments, thereby enhancing the dynamism of the Philippine capital market.
According to the SEC, a funding portal functions as an intermediary that oversees the offering and selling of securities via online platforms, specifically tailored for crowdfunding endeavors. The role of a registrar is critical in this ecosystem, as it involves assessing the eligibility of applicants seeking status as qualified buyers and maintaining a registry of such investors for SEC inspection.
This registry maintenance is already a practiced function among crowdfunding intermediaries registered as registrars, indicating that the new responsibilities will augment their existing operations.
Through its nationwide roadshows, the SEC has been actively advocating crowdfunding as a viable source of capital, particularly for micro, small, and medium enterprises (MSMEs) and start-up ventures.
The latest regulatory enhancement is anticipated to streamline investment processes, attract more participants into the capital market, and, ultimately, unlock the full potential of the Philippine capital market by fostering a more inclusive financial ecosystem.