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:

Related discussions: * Introduction of crowdfunding in the Philippines * Disqualification of intermediaries * Permitted activities of intermediaries * Ongoing obligations of intermediaries * Prudential requirements of intermediaries * Measures to reduce risk of fraud

* Registration of crowdfunding intermediary * Account opening requirements * Completion of offerings, cancellations, reconfirmations * Eligibility for exemption from registration of securities * Registration of funding portals * Registration of crowdfunding Issuers

ISSUER INFORMATION

An intermediary in a transaction involving the offer or sale of securities in reliance to these Rules shall make available to the Commission and to investors any information required to be provided by the issuer of the securities under Section 43 – Disclosure Requirements. 

• This information shall be made publicly available on the intermediary’s platform, in a manner that reasonably permits a person accessing the platform to save, download, or otherwise store the information;

• This information shall be made publicly available on the intermediary’s platform for a minimum of 15 days before any securities are sold in the offering, during which time the intermediary may accept investment commitments;

• This information, including any additional information provided by the issuer, shall remain publicly available on the intermediary’s platform until the offer and sale of securities in reliance to these Rules is completed or cancelled; and

• An intermediary shall require any person to establish an account with the intermediary to access this information.

INVESTOR QUALIFICATION

Each time before accepting any investment commitment (including any additional commitment from the same person), an intermediary shall: 

• Have a reasonable basis for believing that the investor satisfies the investment limitations established by the Crowdfunding Rules. An intermediary may rely on an investor’s representations concerning compliance with the investment limitation requirements, and the amount of the investor’s other investments made pursuant to these Rules unless the intermediary has reason to question the reliability of the representation.
  
• Obtain from the investor the following: (i) Representation that the investor has reviewed the intermediary’s educational materials, understands that the entire amount of his or her investment may be lost, and is in a financial condition to bear the loss of the investment; (ii) Questionnaire completed by the investor demonstrating the investor’s understanding that: there are restrictions on the investor’s ability to cancel an investment commitment and obtain a return of his or her investment; it may be difficult for the investor to resell securities acquired in reliance on these Rules; and investing in securities offered and sold in reliance on the Crowdfunding Rules involves risk, and the investor should not invest any funds in an offering made in reliance on these Rules unless he or she can afford to lose the entire amount of his or her investment; (iii) Signed declaration that the investor has not exceeded his/her investment limit; and (iv) Proof of income from Retail Investors, or a certificate issued by a Registrar of Qualified Buyers from Qualified Investors.

COMMUNICATION CHANNELS

An intermediary shall provide on its platform communication channels by which investors and potential investors can communicate with one another and with representatives of the issuer about offerings made available on the intermediary’s platform, provided: 

• If the intermediary is a funding portal, it does not participate in these communications other than to establish guidelines for communication and remove abusive or potentially fraudulent communications;

• The intermediary permits public access to view the discussions made in the communication channels;

• The intermediary restricts posting of comments in the communications channels to those persons who have opened an account with the intermediary on its platform.

• The intermediary requires that any person posting a comment in the communication channels clearly and predominantly disclose with each posting whether he or she is a founder or an employee of an issuer engaging in promotional activities on behalf of the issuer, or is otherwise compensated, whether in the past or prospectively, to promote the issuer’s offering. 

RESALE OF SECURITIES

An intermediary intending to provide a secondary market for the offer and sale of securities in reliance to the Crowdfunding Rules, shall include in its operational framework the rules and procedures by which the resale of securities in reliance to these Rules will be conducted, and provide in its platform the necessary arrangements in conducting the resale of such securities. 

NOTICE OF INVESTMENT COMMITMENT

An intermediary shall promptly, upon receipt of an investment commitment from an investor, give or send to the investor a notification disclosing: 

• The peso amount of the investment commitment;

• The price of the securities;

• The name of the issuer; and

• The date and time by which the investor may cancel the investment commitment.

MAINTENANCE AND TRANSMISSION OF FUNDS

The proceeds resulting from the offer and sale of Crowdfunding securities, or an amount equal to these proceeds, shall be credited into a sub- account, moved to a sub-portfolio, or otherwise tracked by the Crowdfunding Intermediary in an appropriate manner and attested to by a formal internal process. 

In compliance with this section, an intermediary shall direct investors to transmit the money or other consideration directly to a bank that has agreed in writing to hold the funds for the benefit of, and to promptly transmit or return the funds to the persons entitled thereto. 

An intermediary in a transaction involving the offer or sale of securities in reliance on these shall promptly direct the bank to: 

• Transmit funds from the bank to the issuer when the aggregate amount of investment commitments from all investors is equal to or greater than the target amount of the offering, and the cancellation period as set forth in Chapter Seven of this Article – Completion of Offerings, Cancellations, and Reconfirmations has lapsed, provided that in no event may the intermediary direct this transmission of funds earlier than 15 days after the date on which the intermediary makes publicly available on its platform the information required to be provided by the issuer under Section 43 – Disclosure Requirements;

• Return funds to an investor when an investment commitment has been cancelled in accordance with Chapter Seven of this Article – Completion of Offerings, Cancellations, and Reconfirmations (including for failure to obtain effective reconfirmation as required under Section 27 – Cancellations and Reconfirmations Based in Material Changes); and

• Return funds to investors when an issuer does not complete the offering.

CONFIRMATION OF TRANSACTIONS

An intermediary shall, at or before the completion of a transaction in a security in reliance on these Rules give or send to each investor a notification disclosing: 

• The date of the transaction;

• The type of security that the investor is purchasing;

• The identity, price, and number of securities purchased by the investor, as well as the number of securities sold by the issuer in the transaction and the price(s) at which the securities were sold;

• If a debt security, the interest rate and the yield to maturity calculated from the price paid and the maturity date;

• If callable security, the first date that the security can be called by the issuer; and

• The source, form and amount of any remuneration received or to be received by the intermediary from persons other than the issuer.