Equity crowdfunding in Malaysia is a fundraising platform for companies in various stages of development and sizes to raise early-stage financing through equity and quasi-equity investment from a group of investors.
Investors who invest in these companies via equity crowdfunding will receive equity or shares in the company and would become shareholders of the company.
The objective of the investors is usually to benefit from potential dividends and/or capital gains if the company in the future is acquired or are able to successfully list through an Initial Public Offering (IPO).
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Is equity crowdfunding legal in Malaysia?
In Malaysia, the Securities Commission of Malaysia (SC) is the regulatory body regulating ECF related activities. Companies with the intention to obtain fundraising through equity crowdfunding can only do so with platforms licensed by the SC. These platforms are called Recognised Market Operators.
Examples of Recognised Market Operators (RMO)
- Ata Plus Sdn Bhd
- Crowdo Malaysia Sdn Bhd
- Ethis Ventures Sdn Bhd
- Eureeca SEA Sdn Bhd
- FBM Crowdtech Sdn Bhd
- Fundnel Technologies Sdn Bhd
- MyStartr Sdn Bhd
- Pitch Platforms Sdn Bhd
- iPivot Sdn. Bhd.
- Leet Capital (1337 Ventures)
Who can raise money via equity crowdfunding?
Only Malaysia incorporated private companies and limited liability partnerships (excluding exempt private companies) will be allowed. Companies hosted on the RMO are called the Issuer.
Who can invest in the Issuer via equity crowdfunding?
Equity crowdfunding investment opportunities are open to all investors. There are 3 types of investor categories:
| Investor Type | Criteria |
|---|---|
| Retail Investor | Refers to an individual who is not an angel investor or a sophisticated investor |
| Angel Investor | Refers to an individual:-
a) who is a tax resident in Malaysia; and b) whose total net personal assets exceed RM3 million or its equivalent in foreign currencies; or c) whose gross total annual income is not less than RM180,000 or its equivalent in foreign currencies in the preceding 12 months; or d) who, jointly with his or her spouse, has a gross total annual income exceeding RM250,000 or its equivalent in foreign currencies in the preceding 12 months; |
| Sophisticated Investor | Refers to a high net worth individual, a high net worth entity or an accredited investor as set out in Part 1, Schedules 6 and 7 of the Capital Markets and Services Act 2007. |
Source: https://www.sc.com.my/api/documentms/download.ashx?id=b392ed41-0d9b-47ef-95a8-f64f39a7498b
How much can an issuer raise through equity crowdfunding?
An Issuer can raise up to RM10m via equity crowdfunding. This however does not include the company’s own contribution or fundings obtained through private placement exercise.
FAQs in Equity Crowdfunding in Malaysia
- WeCorporate will be able to assist you with pitch deck preparation, financial forecast preparation, business valuation, term sheet preparation, outsourced CFO and many more.
- Yes. The investor will be categorised as either a retail investor, angel investor or sophisticated investor.
- No. ONLY Malaysia incorporated private companies and limited liability partnerships can raise funds via equity crowdfunding.
Niresh Kaur is a content development manager who writes for WeCorporate. She mainly writes legal articles, as well as analytical content that serves entrepreneurs with insights on the business scene in the APAC region.
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