SEC releases crowdfunding rules
(The Freeman) - July 10, 2019 - 12:00am

CEBU, Philippines — The Securities and Exchange Commission (SEC) yesterday released the rules and regulations on ‘crowdfunding’ activities.

The state-run corporate regulator stated that crowdfunding will give startups and small and medium-sized enterprises (SMEs) access to capital at the same time provide the public with more investment prospects.

Approved by the SEC en banc on July 4, crowdfunding is aptly defined as a fundraising for startups and SMEs that is usually conducted through social media platforms.

It is a three-way system involving the project initiator, supporters or investors, and the platform that brings the initiator and the investors together to realize the business idea.

There are four forms of crowdfunding and these are donation-based, reward-based, lending-based, and equity-based.

SEC also reminded that under Section 8 of the Securities Regulation Code, securities should not be sold or offered for sale or distribution without a registration statement approved by the commission.

However, crowdfunding securities are exempt from registration if the issuer, intermediary and investors comply with the crowdfunding rules.

The rules only cover crowdfunding activities done through online platforms and transactions can only be done through registered intermediaries.

Intermediaries must be registered with the SEC as a crowdfunding intermediary, and may be a registered broker-dealer, an investment house, or a funding portal.  JOB

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