Malaysia Writes First Chapter in Asia’s Rule Book

By Henry Thomas on 3rd July 2015

Equity Crowdfunding

The Securities Commission Malaysia has announced regulation for the crowdfunding industry.

Malaysia Writes First Chapter in Asia’s Rule Book

The new rules allow eligible companies to raise up to RM 3 million in any 12 month period and RM 5 million (£850,000) in total. For the individual investor, a maximum of RM 5,000 can be invested in each company and no more than RM 50,000 can be used for all crowdfunded investments each year. The regulation also stimulates that fraud would bring a maximum jail sentence of 10 years and a minimum fine of RM 1 million.

Datuk Ahmad Maslan, the deputy finance minister, cited the six companies currently registered with the Securities commission and approved to carry out crowdfunding services. He remarked:

"We encourage the use of equity crowdfunding and hope that more people will use it."

"The purpose of today's passing of the Bill is to regulate and protect the interest of investors and companies."

In August last year, AltFi reported that the Securities Commission was seeking public feedback on its proposed regulations. Since then, however, there have been notable commitments to regulate around Asia. In February, the Securities and Exchange Commission of Thailand announced that its own rules could be out within the year. Meanwhile, the Shanghai Daily reports that, with the number of troubled P2P platforms rising seven and a half times in H1 2014 compared to H1 2015, "the China Banking Regulatory Commission will unveil rules in the coming months to tighten the industry."

It appears that Malaysia's landmark regulation is being quickly followed around the continent, as Asian financial authorities attempt to prepare their economies for a market that the World Bank estimated would be worth between $90 bn and $96 bn by 2025.

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