Equity Crowdfunding (ECF)
Equity Crowdfunding (ECF) is an innovative form of alternative fundraising that allows small businesses to raise capital from the public using online platforms registered by the Securities Commission Malaysia. To date, 10 ECF platforms have been registered. ECF allows these small businesses to offer equity in their companies to investors, who in turn invest in the idea they see potential in. With ECF, investors have the opportunity to diversify their investments beyond the traditional asset classes.
Malaysian ECF platforms have seen significant growth in line with the government’s call for financial services providers to embrace technology to develop a more inclusive, innovative and efficient capital market. As of December 2019, RM73.74 million investments was raised, with 80 successful campaigns and 77 successful issuers. The investment demographic revealed that 46% of the participants were below the age of 35 and 52% of the investment came from the retail sector.
Who can invest in ECF?
Investment in ECF is open to all investors, subject to the following limits:
- Retail investors (persons who are not sophisticated investors)
- A maximum of RM 5,000 per company with a total amount of not more than RM 50,000 within a 12 month period
- Angel investors (accredited by the Malaysian Business Angels Network)
- A maximum of RM 500,000 in total within a 12 month period
- Sophisticated investors (persons within the categories of investors set out in Part 1, Schedules 6 and 7 of the Capital Markets and Services Act 2007
- No restriction on investment amount
- Investors are allowed a six-business-day cooling period discretion to withdraw their entire investment
The ECF license enables platforms to raise funding for Malaysian registered sole proprietorships, partnerships, incorporated limited liability partnerships, private limited and unlisted public companies. An issuer can only raise up to RM3 million within a 12 month period and this can be done through several campaigns in this period. Secondly the issuer can raise a maximum amount of RM5 million in totality.
List of Registered Recognised Market Operators for ECF
