A crowdfunding intermediary shall, at all times, maintain a capital amount which exceeds its annual operational expenditure which constitutes all expenses and losses that arise in the crowdfunding intermediary’s normal course of business in a 12-month accounting period. This expenditure- and risk- based minimum capital requirement is provided under the Rules and Regulations Governing Crowdfunding (CF).
A crowdfunding intermediary shall calculate its relevant annual operational expenditure with reference to its most recent audited financial statements (AFS).
- If the most recent AFS does not represent a 12-month accounting period, it shall calculate its annual operational expenditure on a pro rata basis so as to produce an equivalent annual amount.
- If a crowdfunding intermediary has not completed its first twelve months of business operations, it shall calculate its annual operational expenditure based on forecast expenditure as reflected in the budget for the first 12 months of business operations, as submitted with its application.
If a crowdfunding intermediary has (i) a material change in its expenditure; or (ii) varied its crowdfunding activities, it shall recalculate its expenditure-based minimum capital accordingly.
- Where a crowdfunding intermediary has recalculated its annual operational expenditure and its expenditure-based minimum capital, it shall submit this recalculation to the Securities and Exchange Commission (SEC) within 10 days of its completion and seek approval from the SEC.
- The SEC may within 30 days upon receipt of the recalculation object to the recalculation and require the crowdfunding intermediary to revise its expenditure-based minimum capital.
The SEC may require additional capital in the form of cash or insurance to cover any risky activities arising from the proposed or actual operations of the crowdfunding intermediary.
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