#Asia Clarification on the latest developments in Singapore’s crowdfunding regulation drive


Last week, crowdfunding platform for SMEs Funding Societies announced that it temporarily halts crowdfunding loan term following regulation

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Last week, Singapore-based crowdfunding platform for small businesses Funding Societies announced that it is temporarily halting crowdfunding loan terms following regulatory update from Monetary Authority of Singapore (MAS).

A spokeperson for MAS has spoken to e27 about the details of the regulation.

“MAS has not enforced the removal for the promissory note exclusion yet, before the legislative amendment,” the statement said.

The agency further explained that crowdfunding “which involves the offer of securities” is already being regulated by the Singapore Securities and Futures Act.

“For example, where an entity, such as a crowdfunding platform, facilitates an offer of securities, it would be considered as conducting the regulated activity of ‘dealing in securities’ and be required to hold a Capital Markets Services licence, unless an exemption applies,” it stated.

“Similarly, the issuer who makes an offer of securities will be subject to prospectus requirements unless an exemption applies. If crowdfunding does not involve the offer of securities, it is excluded from the regulatory framework,” the statement added.

The institution stressed that crowdfunding platforms which facilitate the offer of promissory notes may continue to do so without holding the licence.

“We have also encouraged crowdfunding platforms to apply for a licence early to avoid disruptions to their business when the legislative amendments are effected. We have not enforced the change prematurely (i.e. before the legislative amendment),” MAS said.

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On the use of promissory note, MAS also made it clear that an entity which facilitates its offer “is not required to be licensed.”

“An issuer who offers promissory notes is excluded from the prospectus requirements, provided the promissory note has a face value of at least S$100,000 (US$74,000) and a maturity period of not more than 12 months. MAS has announced that we will be removing both the licensing and prospectus exclusions for promissory notes, and the relevant legislative amendments are expected to be tabled in Parliament in the second half of 2016,” it said.

What penalties could companies face if they trip over the regulations?

“Any person who conducts regulated activities under the SFA without the requisite approval or licence (including the holding of a Capital Market Services licence to operate a securities-based crowdfunding platform) contravenes the law, and could be liable on conviction to a fine or imprisonment,” the agency explained.

“Where a regulated entity is found to have breached a regulatory requirement, MAS may take a range of supervisory measures ranging from enhanced audits to revocation of licence,” it added.

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A Funding Societies spokesperson stated that MAS had communicated with the company and its clients to clarify several statements.

“MAS has not enforced any change prematurely before the legislative amendment comes into effect. The main differences between regulatory clarifications and regulatory amendments are: For regulatory clarification, MAS is enforcing with immediate effect because the regulations have always been there, just that they were misunderstood and now MAS has clarified them,” the spokesperson stated.

“Since there is no misunderstanding now, players need to comply immediately. For regulatory amendments (i.e. the new regulations), MAS has not enforced yet.”

Image Credit: Kevin Curtis on Unsplash

The post Clarification on the latest developments in Singapore’s crowdfunding regulation drive appeared first on e27.

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