SC Malaysia Issues Property Crowdfunding Rules

Malaysia’s Securities Commission has released guidelines for property crowdfunding, while also authorising new equity crowdfunding and P2P platforms.

Malaysia’s SC (Securities Commission) has authorised eight new ‘recognised market operators’ – three ECF (equity crowdfunding) and five P2P (peer-to-peer) financing platforms.

“The introduction of ECF and P2P financing provides an alternative source of capital for MSMEs [micro, small and medium enterprises] to fund business expansion, finance working capital and meet other financial requirements,” said SC chairman Datuk Syed Zaid Albar.

The new ECF and P2P financing platforms, once operational by year-end, will bring the number of market-based financing platform operators registered in Malaysia to 21.

At the end of March 2019, ECF and P2P platforms provided nearly MYR 350 million (USD 83.6 million) of alternative financing to about 900 Malaysian MSMEs.

The SC has now also released a new PCF (property crowdfunding) framework, following from an 2019 Budget initiative to provide an alternative financing avenue for first-time homebuyers. An earlier version of the framework was open for consultation in March.

The PCF model allows homebuyers bypass banks for loans, and instead connect directly with investors. The government believes it will help solve a MYR 20 billion property overhang.

Under the revised guidelines, first-time homebuyers can finance up to 90 percent of the property value, for properties worth not more than MYR 500,000 at the primary offering.

The guidelines list out the requirements and obligations of a PCF platform operator, include minimum shareholders’ funds of MYR 10 million. Operators have an obligation to provide fair, clear and timely information to both homebuyers and investors prior to participating in a PCF campaign, in addition to exit certainty at the end of the agreed tenor.

Source: RegulationAsia