SINGAPORE - Start-ups and small and medium enterprises (SMES) will now find it easier to tap securities crowdfunding (SCF) under new steps announced by the Monetary Authority of Singapore (MAS) on Wednesday (June 8).
Securities crowdfunding is the online offering of private company securities to investors. It enables broad groups of investors to fund startup companies and small businesses in return for some form of securities like shares in the company.
MAS said it will make it easier for SCF platform operators to rely on existing rules for small offers to raise funds, even from retail investors.
The rules currently allow issuers raising less than S$5 million within 12 months to do so without having to issue a prospectus. They first, though, have to undergo pre-qualification checks to show that their investors are financially competent and suitable to invest in securities crowdfunding.
MAS will now simplify these checks so that the process can be completed more easily.
Secondly, MAS will reduce the financial requirements for SCF platform operators who want to raise funds through SCF only from accredited and institutional investors.
They can now be licensed as dealing intermediaries as long as they do not handle customer monies, assets or positions and do not act as principal against their customers.
The base capital requirement and minimum operational risk requirement for these intermediaries will be reduced from S$250,000 to S$50,000.
The MAS will publish new guidelines on SCF-related advertising and frequently asked questions on lending-based crowdfunding.
"Securities-based crowdfunding is a useful addition to our financing landscape. At the same time, SCF investments can be quite risky," said MAS assistant managing director of capital markets Lee Boon Ngiap.
"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."