SEC eases debenture crowdfunding rules

SEC eases debenture crowdfunding rules

Move seeks to assist small firms, startups

SEC secretary-general Ruenvadee Suwanmongkol. SOMCHAI POOMLARD
SEC secretary-general Ruenvadee Suwanmongkol. SOMCHAI POOMLARD

The Securities and Exchange Commission (SEC) has relaxed debenture crowdfunding regulations to help small and medium-sized enterprises (SMEs) and startups gain greater access to funding sources via capital market mechanisms.

Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture, typically via the internet.

The SEC's board revised the debenture crowdfunding regulation from the previous all-or-nothing rule to allow debenture issuers, who can raise funds up to 80% of targeted crowdfunding project values, to not cancel the offering.

Instead, debenture issuers have to notify investors and disclose information on their decision not to cancel the offering to reduce any limitations incurred from the all-or-nothing rule. This regulatory revision is in line with overseas crowdfunding regulations, according to the SEC.

Crowdfunding portals must also be established with an efficient IT system in accordance with the rules and guidelines associated with the SEC's IT system provision, aiming to establish clearer standards and guidelines for business operators.

But the SEC still maintains the all-or-nothing regulation for equity crowdfunding projects, where issuers need to fully meet the targeted fundraising amount or nullify the projects, said SEC secretary-general Ruenvadee Suwanmongkol.

In December, the market regulator approved a crowdfunding licence for Peer Power, a debt crowdfunding platform aiming to launch debenture crowdfunding and equity crowdfunding projects.

The company has three SME projects in the pipeline for debenture crowdfunding.

Ms Ruenvadee said the SEC's board has also approved a regulatory framework for SMEs and startups to launch equity offerings for private placement and retail investors.

Classifications of the types of investors include institutional investors, venture capital, joint venture investors, directors and employees of SMEs and startups or affiliates, investors with a professional licence and retail investors with equity investment capital of at least 5 million baht in the last 12 months.

SMEs and startups registered as public limited companies or limited companies that have been in operation for some time or have a certain business value are allowed to raise funds and list their equities in the secondary market without having to seek the SEC's approval. But they must disclose information about their businesses and earnings as required, she said.

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