Crowdfunding in Malaysia is a growing trend, with a number of platforms available to entrepreneurs and creatives looking to raise funds.
Here are some of the most popular crowdfunding platforms in Malaysia:
Ata Plus is a leading ECF platform in Malaysia, with over RM83 million raised through its platform.
Crowdo is another popular ECF platform, with over RM50 million raised through its platform.
FundedByMe is a global crowdfunding platform that also operates in Malaysia.
MyStartr is a crowdfunding platform that focuses on creative projects.
pitchIN is a crowdfunding platform that focuses on social impact projects.
In addition to these platforms, there are also a number of other crowdfunding platforms available in Malaysia, such as:
To raise funds through crowdfunding, a project creator must create a campaign page on the crowdfunding platform and set a fundraising goal. Once the campaign is launched, supporters can donate money to the project. If the project is able to reach its fundraising goal, the funds will be released to the project creator.
Crowdfunding can be a great way to raise funds for a variety of projects, including:
Businesses
Creative projects
Social impact projects
Personal causes
If you are considering raising funds through crowdfunding, there are a few things you should keep in mind:
Do your research: Before you launch a crowdfunding campaign, it is important to do your research and understand the different crowdfunding platforms available. You should also research the projects that have been successful on these platforms.
Set a realistic goal: When setting a fundraising goal, it is important to be realistic. If you set your goal too high, you may not be able to reach it.
Create a compelling campaign: Your campaign page should be well-written and easy to understand. You should also include clear visuals and videos to help tell your story.
Promote your campaign: Once you have launched your campaign, you need to promote it to your target audience. You can do this through social media, email marketing, and other channels.
Crowdfunding can be a great way to raise funds for your project. However, it is important to do your research and understand the risks involved before you launch a campaign.
Equity Crowdfunding (ECF)
Equity crowdfunding (ECF) is a form of alternative fundraising that allows small businesses to raise capital from the public, using online platforms registered with the Securities Commission Malaysia (SC). ECF platforms allow small businesses to offer equity in their companies to investors, who in turn invest in the concept which they see potential in. Through ECF, investors can diversify their investments beyond traditional asset classes.
There are currently 10 ECF platforms licensed by the SC in Malaysia:
To raise funds through an ECF platform, a company must meet certain requirements, such as having a minimum track record of two years, a minimum paid-up capital of RM1 million, and a minimum valuation of RM5 million. The company must also submit a prospectus to the SC for approval.
Once the prospectus is approved, the company can launch its campaign on the ECF platform. The campaign will have a set funding goal and a duration of 30 to 60 days. If the company is able to raise the funding goal, the investors will receive equity in the company.
ECF is a relatively new form of fundraising in Malaysia, but it has been growing in popularity in recent years. In 2022, ECF platforms raised a total of RM140.38 million for 65 issuers. This shows that there is a growing appetite for ECF among investors in Malaysia.
If you are considering raising funds through ECF, there are a few things you should keep in mind. First, ECF is a high-risk investment, so you should only invest money that you can afford to lose. Second, you should carefully research the companies that you are considering investing in. Finally, you should be aware of the fees that are associated with ECF.
Overall, ECF can be a good way for small businesses to raise capital from the public. However, it is important to do your research before investing in any ECF campaign.
Here are some of the key benefits of ECF for businesses:
It can be a quick and easy way to raise capital.
It can help businesses to reach a wider audience of investors.
It can provide businesses with access to early-stage capital.
It can help businesses to build a community of supporters.
Here are some of the key risks of ECF for businesses:
It can be a risky way to raise capital.
Businesses may not be able to raise the full amount of capital they are seeking.
Businesses may have to give up a significant amount of equity in their company.
Businesses may have to deal with a high level of scrutiny from investors.
Overall, ECF can be a good way for businesses to raise capital, but it is important to weigh the risks and benefits before deciding whether or not to use this method.
How does the SC Regulate ECF Activities in Malaysia
The Securities Commission Malaysia (SC) regulates ECF activities in Malaysia through the Guidelines on Recognized Markets (RMO Guidelines). The RMO Guidelines set out the registration requirements and imposes a set of obligations applicable to an ECF platform provider.
The SC also regulates ECF activities through the following measures:
Registration of ECF platform providers: Only ECF platform providers that are registered with the SC can operate in Malaysia.
Prospectus requirements: Issuers of equity crowdfunding (ECF) securities must submit a prospectus to the SC for approval before they can launch an ECF campaign.
Investor education: The SC conducts investor education programs to raise awareness of the risks of investing in ECF.
Market surveillance: The SC monitors the ECF market to ensure that ECF activities are conducted in a fair and transparent manner.
The SC's regulation of ECF activities in Malaysia is designed to protect investors and to ensure that the ECF market is properly regulated.
Here are some of the key regulatory requirements for ECF platform providers in Malaysia:
The ECF platform provider must be registered with the SC.
The ECF platform provider must have a sound risk management framework in place.
The ECF platform provider must have a robust compliance framework in place.
The ECF platform provider must ensure that all issuers and investors on the platform are properly vetted.
The ECF platform provider must ensure that all disclosure documents submitted by issuers are accurate and complete.
The ECF platform provider must ensure that all transactions on the platform are conducted in a fair and transparent manner.
The SC has taken a proactive approach to regulating ECF in Malaysia. The SC's regulations and guidelines are designed to protect investors and to ensure that the ECF market is properly regulated.
Eligibility Criteria for ECF Platform Provider
The Securities Commission Malaysia (SC) has set out the following eligibility criteria for ECF platform providers in Malaysia:
The applicant must be a body corporate incorporated under the Companies Act 1965.
The applicant must have a paid-up capital of not less than RM1 million.
The applicant must have a minimum of 3 full-time employees who are experienced in the equity crowdfunding or securities industry.
The applicant must have a sound track record in the financial services industry.
The applicant must have a comprehensive risk management framework in place.
The applicant must have a robust compliance framework in place.
In addition to the above criteria, the SC may also consider the following factors when assessing an application for registration as an ECF platform provider:
The applicant's business plan and strategy for the ECF platform.
The applicant's ability to attract and retain issuers and investors.
The applicant's ability to comply with the SC's regulations and guidelines on ECF.
If you are interested in becoming an ECF platform provider in Malaysia, you can find more information on the SC's website.
Here is a summary of the eligibility criteria for ECF platform providers in Malaysia:
Legal entity: The applicant must be a body corporate incorporated under the Companies Act 1965.
Paid-up capital: The applicant must have a paid-up capital of not less than RM1 million.
Experience: The applicant must have a minimum of 3 full-time employees who are experienced in the equity crowdfunding or securities industry.
Track record: The applicant must have a sound track record in the financial services industry.
Risk management: The applicant must have a comprehensive risk management framework in place.
Compliance: The applicant must have a robust compliance framework in place.
Business plan: The applicant must have a sound business plan and strategy for the ECF platform.
Attraction: The applicant must have the ability to attract and retain issuers and investors.
Compliance: The applicant must be able to comply with the SC's regulations and guidelines on ECF.
If you meet the eligibility criteria, you can submit an application to the SC for registration as an ECF platform provider. The SC will assess your application and decide whether or not to grant you registration.
Who can be an ECF Operator
To be an ECF operator in Malaysia, a company must meet the following criteria:
Be a body corporate incorporated under the Companies Act 1965.
Have a paid-up capital of not less than RM1 million.
Have a minimum of three (3) full-time employees who are experienced in the equity crowdfunding or securities industry.
Have a sound track record in the financial services industry.
Have a comprehensive risk management framework in place.
Have a robust compliance framework in place.
In addition to the above criteria, the Securities Commission Malaysia (SC) may also consider the following factors when assessing an application for registration as an ECF operator:
The applicant's business plan and strategy for the ECF platform.
The applicant's ability to attract and retain issuers and investors.
The applicant's ability to comply with the SC's regulations and guidelines on ECF.
If you meet the eligibility criteria, you can submit an application to the SC for registration as an ECF operator. The SC will assess your application and decide whether or not to grant you registration.
Here is a summary of the eligibility criteria for ECF operators in Malaysia:
Legal entity: The applicant must be a body corporate incorporated under the Companies Act 1965.
Paid-up capital: The applicant must have a paid-up capital of not less than RM1 million.
Experience: The applicant must have a minimum of three (3) full-time employees who are experienced in the equity crowdfunding or securities industry.
Track record: The applicant must have a sound track record in the financial services industry.
Risk management: The applicant must have a comprehensive risk management framework in place.
Compliance: The applicant must have a robust compliance framework in place.
Business plan: The applicant must have a sound business plan and strategy for the ECF platform.
Attraction: The applicant must have the ability to attract and retain issuers and investors.
Compliance: The applicant must be able to comply with the SC's regulations and guidelines on ECF.
If you are interested in becoming an ECF operator in Malaysia, you can find more information on the SC's website.
Obligations and Key Regulatory Requirements for ECF Operator
The Securities Commission Malaysia (SC) regulates ECF activities in Malaysia through the Guidelines on Recognized Markets (RMO Guidelines). The RMO Guidelines set out the registration requirements and imposes a set of obligations applicable to an ECF platform provider.
Here are some of the key regulatory requirements for ECF platform providers in Malaysia:
The ECF platform provider must be registered with the SC.
The ECF platform provider must have a sound risk management framework in place.
The ECF platform provider must have a robust compliance framework in place.
The ECF platform provider must ensure that all issuers and investors on the platform are properly vetted.
The ECF platform provider must ensure that all disclosure documents submitted by issuers are accurate and complete.
The ECF platform provider must ensure that all transactions on the platform are conducted in a fair and transparent manner.
In addition to the above, ECF operators in Malaysia are also subject to the following obligations:
Providing investors with adequate information: ECF operators must provide investors with adequate information about the issuers and the ECF campaigns on their platforms. This information must be accurate and complete, and it must be made available to investors in a clear and concise manner.
Monitoring the ECF market: ECF operators must monitor the ECF market to ensure that ECF activities are conducted in a fair and transparent manner. This includes monitoring the activities of issuers and investors on their platforms, and taking steps to address any concerns that may arise.
Reporting to the SC: ECF operators must report to the SC on a regular basis on their activities. This reporting must include information on the number of issuers and investors on their platforms, the amount of funds raised through ECF, and any other relevant information.
The SC's regulation of ECF activities in Malaysia is designed to protect investors and to ensure that the ECF market is properly regulated. By imposing these obligations on ECF operators, the SC aims to ensure that ECF activities are conducted in a safe and orderly manner.
Additional Obligation Imposed for the Offering of Shariah-Compliant Equity on ECF Platform
There are additional obligations imposed for the offering of Shariah-compliant equity on ECF platform in Malaysia. These obligations are set out in Chapter 12 of the Guidelines on Recognized Markets (RMO Guidelines).
The following are the additional obligations imposed for the offering of Shariah-compliant equity on ECF platform in Malaysia:
The issuer must be a Shariah-compliant company. This means that the issuer's business activities must be Shariah-compliant and that its financial products must be Shariah-compliant.
The prospectus must be Shariah-compliant. This means that the prospectus must be reviewed by a Shariah advisor and must be approved by the Securities Commission Malaysia (SC).
The ECF platform provider must be Shariah-compliant. This means that the ECF platform provider must have a Shariah committee and must comply with the SC's guidelines on Shariah-compliant ECF platforms.
The SC has taken a proactive approach to regulating Shariah-compliant ECF in Malaysia. The SC's regulations and guidelines are designed to protect investors and to ensure that the Shariah-compliant ECF market is properly regulated.
Here are some additional things to keep in mind about the additional obligations imposed for the offering of Shariah-compliant equity on ECF platform in Malaysia:
The additional obligations are designed to ensure that Shariah-compliant ECF is offered in a fair and transparent manner.
The additional obligations are also designed to protect investors from investing in Shariah-non-compliant products.
The SC may impose additional obligations on Shariah-compliant ECF in the future.
If you are considering investing in Shariah-compliant ECF, it is important to be aware of the additional obligations that are imposed. You should also carefully review the prospectus to ensure that the product is Shariah-compliant.
Who can Raise Funds through Equity Crowdfunding
Only locally incorporated private companies (excluding exempt private companies) and limited-liability partnerships can raise funds through equity crowdfunding in Malaysia. The following entities are prohibited from raising funds through an ECF platform:
Commercially or financially complex structures (i.e. investment fund companies or financial institutions).
Public listed companies and their subsidiaries.
In order to raise funds through equity crowdfunding in Malaysia, the company must meet the following requirements:
The company must have been incorporated for at least two years.
The company must have a minimum paid-up capital of RM1 million.
The company must have a minimum valuation of RM5 million.
The company must submit a prospectus to the Securities Commission Malaysia (SC) for approval.
The prospectus must include the following information:
The company's business plan.
The company's financial statements.
The risks associated with investing in the company.
Once the prospectus is approved, the company can launch its campaign on an ECF platform. The campaign will have a set funding goal and a duration of 30 to 60 days. If the company is able to raise the funding goal, the investors will receive equity in the company.
It is important to note that equity crowdfunding is a high-risk investment, so investors should only invest money that they can afford to lose. Investors should also carefully research the companies that they are considering investing in.
There are limits on the amount of funds that can be raised from an equity crowdfunding (ECF) platform in Malaysia. The following limits apply:
Individual investors: An individual investor can invest a maximum of RM10,000 in any one ECF campaign.
Corporate investors: A corporate investor can invest a maximum of RM50,000 in any one ECF campaign.
Total funds raised: The total amount of funds that can be raised from an ECF platform in any one year is capped at RM5 million.
These limits are designed to protect investors from the risks associated with equity crowdfunding. Investors should note that equity crowdfunding is a high-risk investment, and they should only invest money that they can afford to lose.
Here are some additional things to keep in mind about the limits on funds raised from an ECF platform in Malaysia:
The limits apply to the total amount of funds that an investor can invest in any one ECF campaign. Investors can invest in multiple ECF campaigns, but they must keep track of the total amount of funds that they have invested.
The limits do not apply to funds raised from other sources, such as venture capital or angel investors.
The limits are subject to change. The Securities Commission Malaysia (SC) may review the limits in the future.
If you are considering investing in an ECF campaign, you should be aware of the limits on funds raised. You should also carefully research the company that you are considering investing in, and you should only invest money that you can afford to lose.
Limits on Funds Raised from ECF Platform
There are limits on the amount of funds that can be raised from an equity crowdfunding (ECF) platform in Malaysia. The following limits apply:
Individual investors: An individual investor can invest a maximum of RM10,000 in any one ECF campaign.
Corporate investors: A corporate investor can invest a maximum of RM50,000 in any one ECF campaign.
Total funds raised: The total amount of funds that can be raised from an ECF platform in any one year is capped at RM5 million.
These limits are designed to protect investors from the risks associated with equity crowdfunding. Investors should note that equity crowdfunding is a high-risk investment, and they should only invest money that they can afford to lose.
Here are some additional things to keep in mind about the limits on funds raised from an ECF platform in Malaysia:
The limits apply to the total amount of funds that an investor can invest in any one ECF campaign. Investors can invest in multiple ECF campaigns, but they must keep track of the total amount of funds that they have invested.
The limits do not apply to funds raised from other sources, such as venture capital or angel investors.
The limits are subject to change. The Securities Commission Malaysia (SC) may review the limits in the future.
If you are considering investing in an ECF campaign, you should be aware of the limits on funds raised. You should also carefully research the company that you are considering investing in, and you should only invest money that you can afford to lose.
Who can Invest in ECF
There are two categories of investors who can invest in equity crowdfunding (ECF) in Malaysia:
Retail investors: Retail investors are individuals who are not considered to be sophisticated investors. Retail investors can invest a maximum of RM10,000 in any one ECF campaign.
Sophisticated investors: Sophisticated investors are individuals who are considered to have the knowledge and experience to assess the risks of equity crowdfunding. Sophisticated investors can invest an unlimited amount in any one ECF campaign.
To be considered a sophisticated investor, an individual must meet the following criteria:
Have a total net personal assets exceeding RM3 million or
Have a total gross annual income not less than RM180,000
In addition to the above criteria, the Securities Commission Malaysia (SC) may also consider other factors when assessing whether an individual is a sophisticated investor. These factors may include the individual's investment experience, financial knowledge, and risk tolerance.
It is important to note that equity crowdfunding is a high-risk investment, so investors should only invest money that they can afford to lose. Investors should also carefully research the companies that they are considering investing in.
Here is a table summarizing who can invest in ECF in Malaysia:
Investor type | Maximum investment |
Retail investor | RM10,000 |
Sophisticated investor | Unlimited |
If you are considering investing in ECF, you should be aware of the limits on investments for retail investors. You should also carefully research the company that you are considering investing in, and you should only invest money that you can afford to lose.
Frequently-Asked Questions
Here are some frequently-asked questions about the Equity Crowdfunding (ECF) Framework in Malaysia:
What is equity crowdfunding?
Equity crowdfunding is a form of alternative fundraising that allows small businesses to raise capital from the public, using online platforms registered with the Securities Commission Malaysia (SC). ECF platforms allow small businesses to offer equity in their companies to investors, who in turn invest in the concept which they see potential in. Through ECF, investors can diversify their investments beyond traditional asset classes.
Who can raise funds through ECF in Malaysia?
Only locally incorporated private companies (excluding exempt private companies) and limited-liability partnerships can raise funds through equity crowdfunding in Malaysia. The following entities are prohibited from raising funds through an ECF platform:
Commercially or financially complex structures (i.e. investment fund companies or financial institutions).
Public listed companies and their subsidiaries.
What are the limits on funds raised from an ECF platform in Malaysia?
There are limits on the amount of funds that can be raised from an equity crowdfunding (ECF) platform in Malaysia. The following limits apply:
Individual investors: An individual investor can invest a maximum of RM10,000 in any one ECF campaign.
Corporate investors: A corporate investor can invest a maximum of RM50,000 in any one ECF campaign.
Total funds raised: The total amount of funds that can be raised from an ECF platform in any one year is capped at RM5 million.
Who can invest in ECF in Malaysia?
There are two categories of investors who can invest in equity crowdfunding (ECF) in Malaysia:
Retail investors: Retail investors are individuals who are not considered to be sophisticated investors. Retail investors can invest a maximum of RM10,000 in any one ECF campaign.
Sophisticated investors: Sophisticated investors are individuals who are considered to have the knowledge and experience to assess the risks of equity crowdfunding. Sophisticated investors can invest an unlimited amount in any one ECF campaign.
To be considered a sophisticated investor, an individual must meet the following criteria:
Have a total net personal assets exceeding RM3 million or
Have a total gross annual income not less than RM180,000
What are the risks of investing in ECF?
Equity crowdfunding is a high-risk investment, so investors should only invest money that they can afford to lose. Investors should also carefully research the companies that they are considering investing in. Some of the risks of investing in ECF include:
The company may not be successful and may go bankrupt.
The company's shares may not be worth as much as you paid for them.
You may not be able to sell your shares easily.
How do I find out more about ECF in Malaysia?
You can find more information about ECF in Malaysia on the Securities Commission Malaysia's (SC) website. The SC's website has a comprehensive guide to ECF, including information on the eligibility criteria for issuers and investors, the limits on funds raised, and the risks of investing in ECF.
How can Interested Applicants Apply to be Registered as an ECF Operator
Interested applicants can apply to be registered as an ECF operator by submitting an application to the Securities Commission Malaysia (SC). The application process is as follows:
The applicant must download the application form from the SC's website.
The applicant must complete the application form and submit it to the SC along with the required supporting documents.
The SC will assess the application and decide whether or not to grant registration.
The required supporting documents for an application to be registered as an ECF operator include:
A copy of the applicant's company registration certificate.
A copy of the applicant's board resolution authorizing the application for registration.
A copy of the applicant's risk management framework.
A copy of the applicant's compliance framework.
A copy of the applicant's business plan.
The application fee for registration as an ECF operator is RM10,000.
The SC's website has a comprehensive guide to the application process for registration as an ECF operator. The guide includes information on the application form, the required supporting documents, and the application fee.
Here are the steps on how to apply to be registered as an ECF operator in Malaysia:
Download the application form from the SC's website. The application form can be found on the SC's website under the "Equity Crowdfunding" section.
Complete the application form. The application form must be completed in full and signed by a director or authorized officer of the applicant company.
Submit the application form along with the required supporting documents. The required supporting documents are listed on the application form.
Pay the application fee. The application fee is RM10,000.
Wait for the SC's decision. The SC will assess the application and decide whether or not to grant registration.
The application process for registration as an ECF operator can take several weeks or months. The SC will notify the applicant of its decision in writing.
If the SC grants registration, the applicant will be issued a certificate of registration. The certificate of registration will be valid for a period of two years. The applicant will need to renew the certificate of registration every two years.
How Bestar can Help
Bestar is a Malaysian company that provides corporate solutions for crowdfunding platforms. Bestar can also help crowdfunding companies in Malaysia with their incorporation.
Here are some of the ways Bestar can help with crowdfunding company incorporation in Malaysia:
Provide guidance on the legal requirements for incorporation: Bestar can help crowdfunding companies to understand the legal requirements for incorporation in Malaysia. This includes the type of company that should be incorporated, the required documents, and the filing fees.
Assist with the incorporation process: Bestar can assist crowdfunding companies with the incorporation process. This includes preparing the required documents, filing the documents with the Registrar of Companies, and obtaining the company's certificate of incorporation.
Provide ongoing support: Bestar can provide ongoing support to crowdfunding companies after incorporation. This includes providing advice on company law, corporate governance, and taxation.
Here are some of the benefits that crowdfunding companies in Malaysia can enjoy by using Bestar's incorporation services:
Peace of mind: Bestar can help crowdfunding companies to ensure that they are compliant with the legal requirements for incorporation in Malaysia. This can give companies peace of mind knowing that they are operating in a compliant manner.
Time savings: Bestar can help crowdfunding companies to save time by taking care of the incorporation process on their behalf. This can free up companies to focus on their core business activities.
Cost-effectiveness: Bestar's incorporation services are a cost-effective way for crowdfunding companies to incorporate in Malaysia. This can help companies to save money and focus on their core business activities.
If you are a crowdfunding company in Malaysia, consider using Bestar's incorporation services. Bestar can help you to incorporate your company in a compliant and cost-effective manner.
Here are some of the documents that are required for incorporating a crowdfunding company in Malaysia:
Memorandum and Articles of Association: The Memorandum and Articles of Association are the governing documents of a company. They set out the company's name, its registered office, its objects, and its share capital.
Incorporation form: The incorporation form is a document that is filed with the Registrar of Companies to register a company. The form must include the company's name, its registered office, its objects, and its share capital.
Declaration of compliance: The declaration of compliance is a document that is signed by the company's directors and secretary. It confirms that the company has complied with all of the legal requirements for incorporation.
Payment of filing fees: The Registrar of Companies charges filing fees for incorporating a company. The fees vary depending on the type of company that is being incorporated.
The incorporation process for a crowdfunding company in Malaysia typically takes 2-3 weeks. The process can be expedited if the company uses a professional service provider like Bestar.
Once the company is incorporated, it will be issued a certificate of incorporation. The certificate of incorporation is a legal document that confirms that the company is registered with the Registrar of Companies.
https://www.capitalmarketsmalaysia.com/digital-equity-crowdfunding-ecf/
https://www.sc.com.my/api/documentms/download.ashx?id=6d671452-d679-4492-8d6f-25f2074f7f71
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