International Financial Law Review
May 2016, pp. 43-45
A recent paper by the Hong Kong Financial Services Development Council (FSDC Paper No 21) suggests legislative changes are not needed to establish a robust equity crowdfunding (ECF) market in the city-state. Titled Introducing a Regulatory Framework for Equity Crowdfunding in Hong Kong, it states that regulatory oversight is sufficient for the practice to ‘operate safely and efficiently’ while allowing it ‘to develop in an environment that provides a level of protection and supervision appropriate to the risk presented to investors’.
The suggested approach, arrived at after comparison with the US, UK, China and Singapore, comprises four key elements. ECF platforms would be brought within an existing category of activity regulated by the Securities and Futures Ordinance (SFO) to provide a basis for regulatory oversight of the platform. Offering securities to the public would be sub- ject to additional exemptions, tailored to ECF, from Hong Kong’s prospec- tus law being granted by the Securities and Futures Commission (SFC) under its existing powers. Issuers would be subjected to disclosure require- ments either by being incorporated in Hong Kong, and so subject to the requirements of the new Companies Ordinance (CO), or be required to offer equivalent disclosure. And the extent to which retail investors may participate in ECF offerings would be determined by primarily financial measures.
Within this broad framework, a number of difficult implementation questions fall to the SFC to determine in view of its overarching regulatory objectives... Click here to read the full article.