Name
Global FinTech Guide
Country _ Name
Malaysia
SectionTitle
Crowdfunding / crowdinvesting / crowdlending
Body
FinTechs belonging to this category operate crowdfunding, crowdinvesting and crowdlending platforms on which money is raised to invest in various projects, mainly start-up companies and real estate projects.

Crowdfunding is not a defined financial service, but generally used to describe donation-based crowdfunding (the investor donates the money to the project), reward-based crowdfunding (the investor receives an often symbolic consideration for his investment), equity-based crowdfunding (crowdinvesting: the investor participates in the profits of the financed project or acquires shares or debt instruments) or lending-based crowdfunding (crowdlending: the investor is reimbursed at the end of the project with or without interest).

Introduction

Attitude of the country towards crowdfunding, crowdinvesting and crowdlending platforms

It is understood that the regulators and public are very receptive of crowdfunding platforms.

Legal affairs

Obligations and requirements to provide crowdfunding, crowdinvesting and crowdlending platforms described above

Equity crowdfunding (“ECF”) platforms are considered as a recognised market platform by the SC, which is described under the Guidelines on Recognized Markets (“RMO Guidelines”) as an alternative trading venue, marketplace or facility that brings together purchasers and sellers of capital market products. Under the said RMO Guidelines and the CMSA, operators of ECFs are required to register with the SC and will be subject to the CMSA. Prospective ECF operators must be locally incorporated companies and are required to submit their Recognised Market Operators application to the SC. There are no minimum capital requirements applicable to ECF operators.

Peer-to-peer (“P2P”) financing platforms are also considered as a recognised market platform by the SC and must be registered with the SC. All P2P operators must be locally incorporated entities and have a minimum paid-up capital of RM 5 million.

The registration fee for recognised market platform operators is RM 5,000 (approximately USD1,440).

Additional comments regarding the legal situation for crowdfunding, crowdinvesting and crowdlending platforms or what FinTech’s must be aware of in this business area

The requirements in which ECF operators are subject to regulation under the RMO Guidelines includes carrying out due diligence exercise on prospective issuers and ensuring compliance with the relevant fundraising and investment limits. Under the RMO Guidelines, an eligible issuer can raise collectively a maximum amount of RM20 million (approximately USD4.6 million) through ECF platforms in its lifetime, excluding the issuer’s own capital contribution or any funding obtained through a private placement exercise. 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.

P2P operators must also comply with requirements under the RMO Guidelines including implementing a transparent risk scoring system, maintaining a rate of financing not exceeding 18% per annum and encouraging retail investors to limit their investments to a maximum of RM50,000 (approximately USD11,400) at any period of time. 

Economic conditions

Market size for crowdfunding, crowdinvesting and crowdlending platforms and biggest companies in this business area

It is reported that funds raised via ECF a

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