{"id":5733,"date":"2019-11-04T13:54:00","date_gmt":"2019-11-04T05:54:00","guid":{"rendered":"https:\/\/pnl-law.com\/blog\/?p=5733"},"modified":"2020-05-04T17:27:26","modified_gmt":"2020-05-04T09:27:26","slug":"ongoing-obligations-of-crowdfunding-intermediaries","status":"publish","type":"post","link":"https:\/\/pnl-law.com\/blog\/ongoing-obligations-of-crowdfunding-intermediaries\/","title":{"rendered":"Ongoing Obligations of Crowdfunding Intermediaries"},"content":{"rendered":"\n<p>A <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Financial-Intermediary\">crowdfunding intermediary<\/a> shall disclose the extent of its review, due diligence exercise, and\/or risk assessment activities carried out on prospective <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Issuer\">issuers<\/a>, including its disclosures, intending to use its <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Crowdfunding-Platform\">crowdfunding platform<\/a>.&nbsp;<\/p>\n\n\n\n<!--more-->\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Related discussions:<br \/>* <a href=\"https:\/\/pnl-law.com\/blog\/introduction-to-crowdfunding-in-the-philippines\/\">Introduction of crowdfunding in the Philippines<\/a><br \/>* <a href=\"https:\/\/pnl-law.com\/blog\/general-requirements-for-crowdfunding-intermediaries\/\">Registration of crowdfunding intermediary<\/a><br \/>* <a href=\"https:\/\/pnl-law.com\/blog\/disqualification-of-crowdfunding-intermediaries\/\">Disqualification of intermediaries<\/a><br \/>* <a href=\"https:\/\/pnl-law.com\/blog\/permitted-activities-for-crowdfunding-intermediaries\/\">Permitted activities of intermediaries<\/a><br \/>* <a href=\"https:\/\/pnl-law.com\/blog\/prudential-requirements-for-crowdfunding-cf-intermediaries\/\">Prudential requirements of intermediaries<\/a><br \/>* <a href=\"https:\/\/pnl-law.com\/blog\/measures-to-reduce-risk-of-fraud-in-crowdfunding-cf\/\">Measures to reduce risk of fraud<\/a><\/td><td><br \/>* <a href=\"https:\/\/pnl-law.com\/blog\/account-opening-in-crowdfunding-intermediaries\/\">Account opening requirements<\/a><br \/>* <a href=\"https:\/\/pnl-law.com\/blog\/requirements-for-crowdfunding-transactions\/\">Requirements for crowdfunding transactions<\/a><br \/>* <a href=\"https:\/\/pnl-law.com\/blog\/crowdfunding-completion-of-offerings-cancellations-and-reconfirmations\/\">Completion of offerings, cancellations, reconfirmations<\/a><br \/>* <a href=\"https:\/\/pnl-law.com\/blog\/crowdfunding-eligibility-for-exemption-from-registration-of-securities\/\">Eligibility for exemption from registration of securities<\/a><br \/>* <a href=\"https:\/\/pnl-law.com\/blog\/registration-of-funding-portals-for-crowdfunding-cf\/\">Registration of funding portals<\/a><br \/>* <a href=\"https:\/\/pnl-law.com\/blog\/issuer-requirements-in-crowdfunding-cf\/\">Registration of crowdfunding Issuers<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>The scope of the review and due diligence exercise by a crowdfunding intermediary shall include taking reasonable steps to:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Conduct background checks on the <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Issuer\">issuer<\/a> to ensure fit and properness of the issuer, its <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-revised-corporation-code\/#Board-Of-Directors\">board of directors<\/a>, 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.&nbsp;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Verify the business proposition of the issuer.<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Carry out assessment on the issuer\u2019s creditworthiness.<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Ensure the <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Issuer\">issuer<\/a>\u2019s disclosure document lodged with the <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Crowdfunding-Intermediary\">crowdfunding intermediary<\/a> is verified against public records and any available third-party sources.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">MONITORING AND COMPLIANCE<\/h2>\n\n\n\n<p>A <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Crowdfunding-Intermediary\">crowdfunding intermediary<\/a> monitors and ensures compliance, by itself, its officers and staff, the issuers and users, of the <a href=\"https:\/\/pnl-law.com\/blog\/securities-covered-by-the-securities-regulation-code-republic-act-no-8799\/\">Securities Regulation Code (SRC)<\/a> and its Implementing Rules and regulations, the <em>Rules and Regulations Governing Crowdfunding<\/em>, its own Rules and Regulations, and other rules and conventions that would be prescribed by the Securities and Exchange Commission (SEC).&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">IMMEDIATE NOTIFICATION TO SEC<\/h2>\n\n\n\n<p>A <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Crowdfunding-Intermediary\">crowdfunding intermediary<\/a> shall immediately notify the SEC of:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Any irregularity or breach of any provision of the <a href=\"https:\/\/pnl-law.com\/blog\/securities-covered-by-the-securities-regulation-code-republic-act-no-8799\/\">SRC<\/a>, its Rules, of the <em>Crowdfunding Rules<\/em>, including any alleged or suspected violations of any law or guidelines in relation to money laundering and terrorism financing by its participants;&nbsp;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Any material change in the information submitted to the SEC; and<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>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 <em>Crowdfunding Rules<\/em>.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">INFORMATION ON PLATFORMS &nbsp;<\/h2>\n\n\n\n<p>A <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Crowdfunding-Intermediary\">crowdfunding intermediary<\/a> shall disclose and display prominently on its platform, any relevant information relating to its crowdfunding activities including:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Information relating to issuer (<a href=\"https:\/\/pnl-law.com\/blog\/issuer-requirements-in-crowdfunding-cf\/\">Issuer Requirements<\/a>);<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Issuer disclosures and other issuer submissions, including Offering Statement, Annual Report and Progress Update;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Information on how the <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Crowdfunding-Platform\">crowdfunding platform<\/a> facilitates the <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Investor\">investor<\/a>\u2019s investment;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>General risk warning in participating in CF;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Information on rights of investor relating to participation in CF;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Information about complaints handling or dispute resolution and its procedures;<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Commission approved fees, charges and other expenses that it may charge to, impose on an issuer or investor; and<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Information on processes and contingency arrangement in the event the crowdfunding intermediary is unable to carry out its operations or cessation of business.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">PAYMENTS TO THIRD PARTIES<\/h2>\n\n\n\n<p>An <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Crowdfunding-Intermediary\">intermediary<\/a> may not compensate any person for providing the intermediary with the <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Sensitive-Personal-Information\">sensitive personal information<\/a> of any <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Investor\">investor<\/a> or potential investor in <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Securities\">securities<\/a> offered and sold in reliance on the <em>Crowdfunding Rules<\/em>.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">END OF COMPLIANCE<\/h2>\n\n\n\n<p>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 <a href=\"https:\/\/pnl-law.com\/blog\/glossary-for-the-securities-regulation-code-src\/#Issuer\">issuer<\/a> shall continue to comply with the ongoing reporting requirements until one of the following occurs:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The issuer or another party repurchases all of the securities issued in reliance with the <em>Crowdfunding Rules<\/em>, including any payment in full of debt securities or any complete redemption of redeemable securities; or<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>The issuer liquidates or dissolves its business in accordance with applicable rules and regulations.<br \/><\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>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.&nbsp;<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1355],"tags":[1387,1388,1390,1405,1404,578,1386],"class_list":["post-5733","post","type-post","status-publish","format-standard","hentry","category-securities-code","tag-crowdfunding","tag-crowdfunding-intermediary","tag-crowdfunding-platform","tag-financial-technology","tag-fintech","tag-investments","tag-rules-and-regulations-governing-crowdfunding-cf"],"_links":{"self":[{"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/posts\/5733","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/comments?post=5733"}],"version-history":[{"count":4,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/posts\/5733\/revisions"}],"predecessor-version":[{"id":5777,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/posts\/5733\/revisions\/5777"}],"wp:attachment":[{"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/media?parent=5733"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/categories?post=5733"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pnl-law.com\/blog\/wp-json\/wp\/v2\/tags?post=5733"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}