MAS Improves Access to Securities-Based Crowdfunding

Morgan Lewis
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Morgan Lewis

The changes modify securities crowdfunding rules to facilitate access to retail investors.

Following a yearlong public consultation exercise, the Monetary Authority of Singapore (MAS) will make it easier for securities crowdfunding platform operators to rely on the small offers exemption for offers of shares to raise funds through securities crowdfunding, including from retail investors. MAS will simplify the prequalifications under the small offers exemption, which allows issuers that raise less than $5 million within 12 months to do so without having to issue a prospectus.

Under the refined investor prequalification process, platform operators and issuers will have to ensure that (i) potential investors either have sufficient knowledge or experience to invest in securities crowdfunding or (ii) securities crowdfunding investments are suitable for potential investors in light of their investment objectives and risk tolerance. This is an ease of the current guidelines in which both factors must be assessed. Platform operators will have to provide a risk-disclosure statement, and investors will have to acknowledge such risks before making an investment.

MAS will also reduce the financial requirements for securities crowdfunding platform operators who want to raise funds only from accredited and institutional investors, as long as they do not handle or hold customer monies, assets, or positions and do not act as principal against their customers. The base capital requirement and minimum operational risk requirement for such intermediaries will be reduced to $50,000. The requirement for a $100,000 security deposit will also be removed.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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