What is Crowdfunding
Crowdfunding in Singapore is a way for individuals or businesses to raise capital by collecting small contributions from a large number of people, typically through an online platform. Crowdfunding platforms in Singapore are regulated by the Monetary Authority of Singapore (MAS).
There are three main types of crowdfunding in Singapore:
Equity crowdfunding: This type of crowdfunding allows investors to contribute money to startups in exchange for shares in the company.
Lending-based crowdfunding: This type of crowdfunding allows borrowers to raise money by lending money from individuals or institutions.
Reward-based crowdfunding: This type of crowdfunding allows individuals or businesses to raise money by offering rewards to backers, such as products, services, or experiences.
Crowdfunding is a popular way to raise capital for startups and other small businesses. It can also be used to raise money for social impact projects.
Here are some of the benefits of crowdfunding in Singapore:
It is a relatively low-cost way to raise capital: Crowdfunding platforms typically charge a small fee to both borrowers and lenders. This can be a more cost-effective way to raise capital than traditional methods, such as bank loans or venture capital.
It can help you reach a wider audience: Crowdfunding platforms allow you to reach a large number of potential investors or backers. This can be helpful if you are looking to raise capital for a startup or other small business.
It can build excitement and support for your project: Crowdfunding can help you build excitement and support for your project. This can be helpful in generating buzz and attracting attention from potential investors or backers.
However, there are also some risks associated with crowdfunding:
There is no guarantee of success: Not all crowdfunding campaigns are successful. There is a risk that you may not raise enough money to complete your project.
There is a risk of fraud: There have been cases of fraud involving crowdfunding platforms. It is important to do your research before investing in any crowdfunding campaign.
There is a risk of dilution: If you raise capital through equity crowdfunding, you may be giving up a portion of your ownership in your company. This can be a risk if you are not comfortable with diluting your ownership.
Overall, crowdfunding can be a valuable tool for raising capital. However, it is important to do your research and understand the risks before participating in a crowdfunding campaign.
Why Register a Crowdfunding Company in Singapore
There are a number of reasons why you might want to register a crowdfunding company in Singapore. Here are a few of the most common reasons:
Singapore is a well-regulated jurisdiction for crowdfunding: The Monetary Authority of Singapore (MAS) regulates crowdfunding platforms in Singapore. This means that there are clear rules and regulations in place to protect investors and borrowers.
Singapore is a business-friendly jurisdiction: Singapore is known for its business-friendly environment. This includes a low corporate tax rate, a well-educated workforce, and a strong legal system.
Singapore has a large and growing pool of potential investors: Singapore has a large and growing pool of potential investors. This is due to the country's strong economy and its growing population of wealthy individuals.
Singapore is a gateway to Asia: Singapore is a gateway to Asia. This means that crowdfunding companies registered in Singapore can reach a large and growing market of potential investors and borrowers in Asia.
If you are considering registering a crowdfunding company, Singapore is a good option to consider. The country has a number of advantages that can make it a successful home for your business.
Here are some additional things to keep in mind when registering a crowdfunding company in Singapore:
You will need to obtain a Capital Markets Services License (CMSL) from the MAS: If you are planning to offer equity crowdfunding or lending-based crowdfunding, you will need to obtain a CMSL from the MAS. The CMSL is a license that allows you to conduct regulated activities in the capital markets, such as dealing in securities and providing financial advisory services.
You will need to comply with MAS regulations: In addition to obtaining a CMSL, you will also need to comply with other MAS regulations that apply to crowdfunding platforms. These regulations cover areas such as investor protection, risk management, and financial reporting.
You will need to have a strong team in place: Crowdfunding is a complex business. You will need to have a strong team in place with experience in the crowdfunding industry.
If you are considering registering a crowdfunding company in Singapore, consult with an experienced lawyer or financial advisor. They can help you understand the legal and regulatory requirements and ensure that you are in compliance.
Registering a Crowdfunding Company
Here are the steps on how to register a crowdfunding company in Singapore:
Set up a company. You will need to register a company with the Accounting and Corporate Regulatory Authority (ACRA). The type of company you register will depend on the type of crowdfunding you will be offering. For example, if you will be offering equity crowdfunding, you will need to register a company as a broker-dealer.
Obtain a Capital Markets Services License (CMSL). If you will be offering equity or lending-based crowdfunding, you will need to obtain a CMSL from the Monetary Authority of Singapore (MAS). The CMSL is a license that allows you to conduct regulated activities in the capital markets, such as dealing in securities and providing financial advisory services.
Comply with MAS regulations. In addition to obtaining a CMSL, you will also need to comply with other MAS regulations that apply to crowdfunding platforms. These regulations cover areas such as investor protection, risk management, and financial reporting.
Launch your crowdfunding platform. Once you have registered your company, obtained a CMSL, and complied with MAS regulations, you can launch your crowdfunding platform.
Here are some additional things to keep in mind when registering a crowdfunding company in Singapore:
You will need to have a minimum paid-up capital of S$50,000 if you will be offering equity or lending-based crowdfunding.
You will need to appoint a compliance officer who is responsible for ensuring that your company complies with MAS regulations.
You will need to establish a complaints handling mechanism for investors.
For more information on registering a crowdfunding company in Singapore, you can visit the MAS website.
Capital Markets Services (CMS) Licence
Securities Crowdfunding (SCF) operators may be required to hold a CMS license.
SCF operators who facilitate the issuance of securities by companies to investors, such as stocks or debentures, and carry out this activity systematically, repeatedly and continuously may require a license.
Depending on their business model, SCF operators may engage in regulated activities of trading capital market products such as securities or fund management, unless an exemption applies. For example, a SCF operator engaged in the business of facilitating securities issuance needs to obtain a CMS license to trade capital market products.
In addition, SCF operators must appoint as representatives individuals who conduct regulated activities on their behalf.
Examples of exemptions for transactions in capital market products (securities) include:
If the company trades bonds with accredited investors, expert investors or institutional investors.
If the company trades with or through a regulated financial institution on its own account or the account of a related company (i.e. proprietary trading).
A company offering securities on an SCF operator's platform must issue a prospectus to investors unless the offering falls under one of the SFA's exemptions.
The prospectus exemption applies to offers such as the following:
Individuals raising no more than $5 million in any 12-month period;
Offers to no more than 50 people in any 12-month period;
Offers to institutional investors; and
Offers to accredited investors and family members.
SCF operators must develop policies, procedures and controls commensurate with the nature, size and complexity of their business, including establishing an independent compliance function in Singapore. SCF operators should also comply with conduct requirements, such as keeping proper transaction records, providing statements of accounts and risk disclosure to investors, and MAS requirements on anti-money laundering and countering terrorism financing.
In addition, SCF operators should ensure that companies that make offers on their platform meet the requirements of the prospectus.
Admission Criteria
When evaluating a CMS license application, MAS considers the following factors:
The suitability and suitability of the applicant, its shareholders and directors.
The track record and management expertise of the applicant and its parent or major shareholders.
The ability to meet the minimum financial requirements set forth by the SFA.
The strength of internal risk management and compliance systems.
Business model/plans and forecasts and associated risks.
Your company will also need to appoint the following people:
At least 2 directors, at least one of whom is resident in Singapore.
The CEO has at least 10 years of relevant experience and resides in Singapore.
At least 2 full-time Singapore-based staff. These individuals must be appointed as representatives under the SFA.
Financial Requirements
Basic capital requirement ranges from S$50,000 to S$1 million, depending on the type of product offered, the type of client and whether the SCF operator is handling client funds or assets or transacting with clients as principal.
SCF operators must maintain financial resources that exceed their total risk requirements.
Applying for a CMS Licence
Your company should file Form 1 under the Securities and Futures (Licensing and Conduct of Business) Regulations (SF(LCB)R).
In addition, you have to appoint your hired or appointed individuals conducting an activity under your licence as an appointed or provisional representative. You can refer to Appointing a Representative for CMS Licensees or Exempt Financial Institutions for more information.
Processing Time Required
MAS anticipates that it will take up to 6 months to review applications that are complete and meet all admission criteria.
Fees
Application fee
A non-refundable application fee of $1,000 is payable to the Authority to submit this application.
Annual Fee
Annual fee ranges from $2,000 to $8,000, depending on the type of capital markets product offered.
How Bestar can Help
Bestar is a company formation service provider in Singapore. We can help you register a crowdfunding company in Singapore by providing the following services:
Company incorporation: Bestar can help you incorporate your crowdfunding company in Singapore. We will take care of all the legal paperwork and ensure that your company is properly registered with the Accounting and Corporate Regulatory Authority (ACRA).
Capital Markets Services License (CMSL) application: If you are planning to offer equity crowdfunding or lending-based crowdfunding, Bestar can help you apply for a CMSL from the Monetary Authority of Singapore (MAS). We will prepare all the necessary documentation and assist you with the application process.
MAS compliance: Bestar can help you comply with MAS regulations that apply to crowdfunding platforms. We will provide you with guidance on areas such as investor protection, risk management, and financial reporting.
If you are considering registering a crowdfunding company in Singapore, Bestar can be a valuable resource. We can help you navigate the legal and regulatory requirements and ensure that your company is successful.
Here are some of the benefits of using Bestar to register your crowdfunding company in Singapore:
Expertise: Bestar has a team of experienced professionals who can help you with all aspects of the registration process.
Convenience: Bestar can take care of all the paperwork and filing for you, so you can focus on other aspects of your business.
Peace of mind: Knowing that your company is properly registered and compliant with MAS regulations can give you peace of mind.
If you are interested in learning more about how Bestar can help you register your crowdfunding company in Singapore, you can visit our website or contact us for a consultation.
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