CMA approves regulatory framework for equity crowdfunding

Logo of Capital Market Authority (CMA)

The Capital Market Authority’s (CMA) board approved today, Sept. 27, amendments to the Rules on the Offer of Securities and Continuing Obligations, and amendments of the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority, which shall be effective as of their publication date.

These amendments aim to support financial technology (fintech) innovations in the capital market by setting out a regulatory framework for equity crowdfunding, including determining the requisite authorization for capital market institutions to practice equity crowdfunding. They also aim to enable companies that have a Financial Technology Experimental Permit (FinTech ExPermit) to obtain the appropriate authorization to practice it as a capital market institution, in line with the international best practices in this regard.

The amendments include regulating share offering through capital market institutions that are authorised to carry out arranging activities in the course of practicing securities crowdfunding.

Also, the amendments comprised setting the requirements for custody of clients' money received by capital market institutions that are authorised to carry out arranging activities in the course of carrying out securities crowdfunding, and opening and operating investment accounts.

This comes after the CMA has published the draft Regulatory Framework for Equity Crowdfunding on its website for public comments.

It is expected that the amendments shall reflect on enabling the capital market institutions authorised to carry out arranging activities to offer of securities via Equity Crowdfunding platforms, as well as the custody of the clients' money in the course of carrying out securities crowdfunding.

To view the amended Capital Market Institutions Regulations, the amended Investment Accounts Instructions, the amended Rules on the Offer of Securities and Continuing Obligations, and the amended Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority, click here: