The SC today released a consultation paper on its proposed regulatory framework for equity crowdfunding. The regulatory body has given members of the public until September 5th to comment on the proposed changes.
Malaysia is one of many countries in the developing world thinking of legalising crowdfunding. According to a World Bank report published last year, the market potential for crowdfunding in the developing world is estimated at $96 billion per year by 2025. This would represent approximately 1.8 times the total global venture capital investments in 2012.
The regulatory board in Malaysia stated that it has considered equity crowdfunding as a crucial and innovative market-based structure to facilitate the growth of the country’s SMEs. Malaysia’s 700,000 SMEs contribute as much as a third of the nation’s GDP. Proponents of equity crowdfunding have suggested that the industry could and perhaps should provide these companies with the opportunity to gather investments from the public, rather than relying on VCs.
The Securities Commission plans to collaborate with various companies to set up online websites for start-ups.
Goh Ching Yin, The Securities Commission’s Market Development Executive Director, stated that the drafted legislation would be presented to Parliament in October.
“Venture capital and private equity firms will have to play this new game. Now all these ideas would be showcased to them online at the same time as to the public.”
“The investment landscape would be levelled. This is an exciting new space.”