facebookAre private (not via the accredited platform) P2P debt/reward crowdfunding allowed in Singapore or must approval from MAS be obtained? - Seedly

Anonymous

03 Dec 2019

∙

Property

Are private (not via the accredited platform) P2P debt/reward crowdfunding allowed in Singapore or must approval from MAS be obtained?

This is not soliciting for funding from the public but from a small group of people (angel investors like) for specific projects/ventures by the startup themselves...

Would like to know more about the rules and regulations in Singapore.

Discussion (10)

What are your thoughts?

Learn how to style your text

Hey there! I’m Jamie, the community manager for CoAssets Pte Ltd (CoAssets). Firstly, according to MAS, “crowdfunding” generally refers to a capital-raising approach that seeks to raise funds from a large number of individuals. Typically, funds are raised through an online platform using the following forms of crowdfunding:

(a) Donation-based crowdfunding

(b) Reward-based crowdfunding

(c) Lending-based crowdfunding

(d) Equity-based crowdfunding

Read more on crowdfunding at: https://bit.ly/362oksg

Fundraising from the public through lending-based crowdfunding, or P2P lending, is regulated by MAS under the Securities and Futures Act (Cap. 289) (the “SFA”) and the Financial Advisers Act (Cap. 110) (the “FAA”).

Read more on lending-based crowdfunding platform at: https://bit.ly/362ocJi

All P2P lending platforms has to be regulated by MAS under the Securities and Futures Act and the Financial Advisers Act. All operators are required to hold a capital market services (“CMS”) licence. According to Money Smart, these organisations are licensed under MAS: Funding societies, Seedin, Capital Match, Minterest, Moolasense, and CoAssets. Read more about the various organisations at: https://bit.ly/2Ni8kdk

Under section 239(3) of the SFA, any invitation to lend money to an entity (e.g. a company) is deemed to be an offer of debentures, which is a type of security. The entity offering debentures is require to prepare and register a prospectus with MAS in accordance with Division 1 Subdivision 2 of part XIII of the SFA (“Prospectus Requirements”) unlessit falls within one of the several prospectus exemptions which is, a small offer and private placement.

  1. Small offers:

· Personal offers of securities, up to $5 million within any 12-month period, without a prospectus subject to certain conditions.

· A personal offer is one that is directed at a pre-identified individual or entity, which would include offers made to persons who have previous professional or other connection with the offeror.

· As the word “personal” suggests, each offer must be made personally by the offeror or by a person acting on its behalf to the pre- identified individual or entity and can only be accepted by the pre- identified individual or entity to whom the offer was made. There are other factors that does not satisfy the ‘personal offer’ test such as To get more information on what deems as a personal offer, please read more at:https://bit.ly/2MN3Eg8 To get more information on what relationships would not satisfy the ‘personal offer” test, please read more at: https://bit.ly/33Zoqit

  1. Private placements:

· Offers of securities to no more than 50 persons within a 12-month period maybe be exempted, not accompanied by any advertisements calling attention.

· No selling or promotional services. To get more information on private placements, please read: https://bit.ly/2JoE9Qu To get more information on exemptions on private placements, please read page 5 of: https://bit.ly/2MKjica

On top of that, there are certain criteria that a company needs to fulfil when applying for a CMS licence. MAS takes into account factors such as:

  • Fitness and propriety of the applicant, its shareholders and directors.
  • Track record and management expertise of the applicant and its parent company or major shareholders.
  • Ability to meet the minimum financial requirements prescribed under the SFA.
  • Strength of internal risk management and compliance systems.
  • Business model/ plans and projections and the associated risks.

Your company will also need to appoint the following individuals:

  • Minimum of 2 directors, at least one is resident in Singapore.
  • Chief Executive Officer with least 10 years of relevant experience and is resident in Singapore.
  • Minimum of 2 full-time Singapore-based individuals for each regulated activity (except REIT management). Such individuals are required to be appointed as representatives under the SFA.

To get more information on criteria for applying for a CMS licence, please read: https://bit.ly/2N9M2dG

Hence to answer your question, the term ‘Private Crowdfunding’ within a small group of people from the start-up itself might require a licence if you have met the stated conditions. However, I would highly recommend any person who wishes to raise funds through crowdfunding to seek legal advice to ensure that the proposed activities are in compliance with all applicable laws, rules and regulations in Singapore. I hope this helps!

View 3 replies

Alex Chua

24 Oct 2019

Seedly student Ambassador 2020/21 at Seedly

I can only tell you in regards to p2p lending in Singapore. Every p2p lending platform is regulated by MAS. Just search of the p2p lending in the current market to find out the specific license. Even money lenders in Singapore are regulated. Otherwise, it is considered illegal.

View 1 replies

Arun Pai

24 Oct 2019

Chief Kristals Officer at Kristal.AI

Any platform that enables customers to invest their money be it P2P platforms (such as Validus, Mool...

Write your thoughts