The Securities and Exchange Commission issued rules and regulations covering crowdfunding to enable start-ups, micro and small and medium enterprises to raise up to P50 million for a venture or business through an online electronic platform.
The SEC said in a statement it issued the rules in compliance with the Securities Regulation Code and international best practices and standards.
Aside from helping small businesses raise capital through the internet, the new rules will provide the public more legitimate investment options.
“Information and communication technology has made a significant impact on our financial environment,” SEC chairperson Emilio Aquino said.
“With the rules and regulations governing crowdfunding in place, the commission hopes to support recent financial innovations on providing easier access to finance especially for smaller business startups or ventures while ensuring fairness of financial systems and the protection of investors,” he added.
Under the rules, a small business may offer or sell securities to the public without prior registration with the SEC, as long as the offering is over P10 million and covers only a period of 12 months.
Meanwhile, offering of securities with an aggregate value of above P10 million but not more than P50 million within a 12-month period can only be offered and sold to qualified buyers.
Securities under the SRC should not be sold or offered for sale or distribution within the Philippines without a registration statement duly filed with and approved by the Commission.
To promote capital market development and access to finance, however, the new rules exempt the securities from SEC registration as long as the issuer, intermediary and investors comply with the regulations.
The rules mainly govern the operation and use of equity- and lending-based crowdfunding by registered persons such as brokers, investment houses, funding portal and issuers and investors who participate in such fund-raising activities online.
“Securities-based crowdfunding can offer an alternative source of private financing for startups and SMEs. Further, market validation through successful crowdfunding campaigns may create more funding opportunities for businesses,” the SEC said.