A 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.
The scope of the review and due diligence exercise by a crowdfunding intermediary shall include taking reasonable steps to:
- Conduct background checks on the issuer to ensure fit and properness of the issuer, its board of directors, senior management and controlling owner. The crowdfunding intermediary shall require the submission of NBI Clearance of the issuer, its board of directors, senior management and controlling owner among other things.
- Verify the business proposition of the issuer.
- Carry out assessment on the issuer’s creditworthiness.
- Ensure the issuer’s disclosure document lodged with the crowdfunding intermediary is verified against public records and any available third-party sources.
MONITORING AND COMPLIANCE
A crowdfunding intermediary monitors and ensures compliance, by itself, its officers and staff, the issuers and users, of the Securities Regulation Code (SRC) and its Implementing Rules and regulations, the Rules and Regulations Governing Crowdfunding, its own Rules and Regulations, and other rules and conventions that would be prescribed by the Securities and Exchange Commission (SEC).
IMMEDIATE NOTIFICATION TO SEC
A crowdfunding intermediary shall immediately notify the SEC of:
- Any irregularity or breach of any provision of the SRC, its Rules, of the Crowdfunding Rules, including any alleged or suspected violations of any law or guidelines in relation to money laundering and terrorism financing by its participants;
- Any material change in the information submitted to the SEC; and
- Any matter which adversely affects or is likely to adversely affect its ability to meet its obligations or to carry out its functions under the Crowdfunding Rules.
INFORMATION ON PLATFORMS
A crowdfunding intermediary shall disclose and display prominently on its platform, any relevant information relating to its crowdfunding activities including:
- Information relating to issuer (Issuer Requirements);
- Issuer disclosures and other issuer submissions, including Offering Statement, Annual Report and Progress Update;
- Information on how the crowdfunding platform facilitates the investor’s investment;
- General risk warning in participating in CF;
- Information on rights of investor relating to participation in CF;
- Information about complaints handling or dispute resolution and its procedures;
- Commission approved fees, charges and other expenses that it may charge to, impose on an issuer or investor; and
- Information on processes and contingency arrangement in the event the crowdfunding intermediary is unable to carry out its operations or cessation of business.
PAYMENTS TO THIRD PARTIES
An intermediary may not compensate any person for providing the intermediary with the sensitive personal information of any investor or potential investor in securities offered and sold in reliance on the Crowdfunding Rules.
END OF COMPLIANCE
This is provided in a separate Rule (Reports, Recordkeeping and Other Post-Registration/Operational Requirements), but it might be helpful to include this topic in this post. An issuer shall continue to comply with the ongoing reporting requirements until one of the following occurs:
- The issuer or another party repurchases all of the securities issued in reliance with the Crowdfunding Rules, including any payment in full of debt securities or any complete redemption of redeemable securities; or
- The issuer liquidates or dissolves its business in accordance with applicable rules and regulations.
- Extension of Filing Periods and Suspension of Hearings for March 29 to April 4, 2021: SC Administrative Circular No. 14-2021 (Full Text) - March 28, 2021
- ECQ Bubble for NCR, Bulacan, Cavite, Laguna and Rizal: Resolution No. 106-A (Full Text) - March 27, 2021
- Guidelines on the Administration of COVID-19 Vaccines in the Workplaces (Labor Advisory No. 3) - March 12, 2021