The Securities and Exchange Commission (SEC) has given crowdfunding portals the authority to act as registrars of qualified institutional and individual buyers, as it ramps up efforts to boost the capital market.
The Commission has issued SEC Memorandum Circular No. 12, Series of 2023, providing Amendments to Section 39.1.4.1 of the Implementing Rules and Regulations (IRR) of the Securities Regulation Code (SRC).
The amendment adds funding portals registered under the Rules and Regulations Governing Crowdfunding, to the list of authorized registrars, provided they have applied and complied with the registration requirements of the SRC IRR.
Previously, only the traditional financial intermediaries have been authorized to act as registrars under the SRC IRR.
“Recognizing crowdfunding portals as eligible to act as registrar of qualified buyers will facilitate the process for qualified investors in accessing alternative investment opportunities, without the need to reach out to several different institutions,” SEC Chairperson Emilio B. Aquino said.
He noted that, “this is in line with our efforts to encourage more people to tap alternative sources of funding and investment, as we seek to unlock the full potential of the Philippine capital market.”
A funding portal is an intermediary which facilitates transactions involving the offer and sale of crowdfunding securities through an online electronic platform.
Meanwhile, the primary purpose of a registrar is to evaluate the qualifications of a natural or juridical person in their application as qualified buyer.
It also maintains and makes available for inspection by the Commission’s representatives a registry book of qualified buyers, which is a similar function already exercised by crowdfunding intermediaries that registered to act as registrar of qualified buyers.
As such, the registrar’s functions will complement the current functions of a crowdfunding intermediary.
By being listed as an authorized registrar, crowdfunding intermediaries and funding portals will no longer be reliant on third party institutions to assist potential investors with their application as qualified buyers.
Micro, small and medium enterprises (MSMEs) could raise up to P50 million capital within a 12-month period from the investments from qualified buyers, as per Section 3(B)(ii) of MC 14.
The SEC has been pitching crowdfunding as a source of capital for MSMEs and start-ups through nationwide roadshows. It has already completed stops in Davao, Cebu, Cagayan de Oro, Zamboanga, Iloilo, Manila, and Tarlac-Clark, with more to be conducted in Baguio, Legaspi and Tacloban for the rest of the year.