Crowdfunding transactions, in order to be legally exempt from the general requirements of securities registration, must be only done through a crowdfunding platform. An intermediary controls this platform, which is why the intermediary has a number of duties, including the institution of measures to reduce the risk of fraud, as well as the following:
Continue readingThe intermediary in a crowdfunding transaction has control over the platform where securities of registered issuers are listed. The intermediary has the obligation to institute measures to reduce the risk of fraud, working on reasonable belief on what it should allow or not allow.
Continue readingAn issuer who wishes to list its securities in the crowdfunding platform must submit disclosures, including an Offering Statement, which must indicate the target offering amount and the deadline to reach the target offering amount. The target amount must be reached on or before the deadline; otherwise, no securities will be sold in the offering and investment commitments will be cancelled and committed funds will be returned.
Continue readingNo intermediary may accept an investment commitment in a transaction involving the offer or sale of securities in reliance on the Crowdfunding Rules until the investor has opened an account with the intermediary and the intermediary has obtained from the investor consent to electronic delivery of materials.
Continue readingA crowdfunding intermediary is the entity that mediates offer and sale of crowdfunding securities through its online electronic platform. A crowdfunding intermediary may be a: (a) registered broker; (b) investment house; or (c) funding portal. Continue reading below for the list of permitted activities for crowdfunding intermediaries.
Continue readingThe crowdfunding intermediary must be duly registered as: (i) a broker, pursuant to the requirements of Section 28 of the SRC; or (ii) an investment house under the Investment Houses Law and its Implementing Rules and Regulations; or (iii) a funding portal, subject to the requirements of Crowdfunding Rules. [See Registration of funding portals]
Continue readingAll stockholders of a stock corporation shall enjoy preemptive right to subscribe to all issues or disposition of shares of any class, in proportion to their respective shareholdings. This is also called the “right of first refusal”.
Continue readingA crowdfunding intermediary shall disclose the extent of its review, due diligence exercise, and/or risk assessment activities carried out on prospective issuers, including its disclosures, intending to use its crowdfunding platform.
Continue readingThe Securities and Exchange Commission (SEC) may refuse or, after due notice and hearing, suspend or revoke the authority of crowdfunding intermediaries. The Crowdfunding Rules provides that operation with respect to crowdfunding of investment houses, brokers and funding portal may be refused, or any registration granted may be revoked, suspended, or limitations placed thereon, by the SEC.
Continue readingClose corporations are provided under and governed by Title XII of the Revised Corporation Code, without prejudice to the suppletory application of other provisions. The pertinent provisions are discussed below.
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