Malaysia Equity Crowdfunding Framework (MyECF), the government regulatory framework, has certified six equity crowdfunding portals. The platforms are set to start operations in the country in the first three months (Q1) of 2016.
Datuk Chua Tee Yong, deputy finance minister of Malaysia, said that the six platforms had been selected following a thorough scrutiny of 27 local and foreign applicants. He also stated that these platforms are aimed at promoting alternative sources of finance in the country. Therefore potential companies, especially startup companies including small and medium-sized enterprises (SMEs), which need services of these six platforms, will have to submit convincing and feasible business models in order to qualify for the services. They will also be required to provide cash flow information, and show intent of raising capital from alternative sources and not on bank loans and other traditional methods.
CrowdPlus.asia is the first ever equity crowdfunding portal to be launched within the Association of Southeast Asian Nations (ASEAN). Its sole purpose is to help entrepreneurs and individuals raise funds and make investments respectively via the internet. Companies that get approved will be listed on the platform’s website and their details made available to the public for scrutiny. Interested investors will get registered by the companies they choose.
Companies will be allowed to raise capital ranging from RM3 million ($0.69M) to RM5 million ($1.15M) throughout their lifetime. The Securities Commission Malaysia (SC) set this figure to test people’s reaction towards equity crowdfunding. There are no regulations governing equity crowdfunding within the ASEAN region. Malaysia is he first nation to introduce and utilize this method of financing in the region.
Chua also said that they will make sure that investors and companies participating in equity crowdfunding deals are fully aware of the potential risks. To this end, they have put in place measures to protect participants against avoidable risks. Additionally, the government partnership with the Bursa Malaysia SC and Bank Negara was aimed at developing strong regulatory framework in the country’s financial industry.