Equity crowdfunding gets green light from the Minister
– no individual investor caps
Cabinet has today approved the regulations for equity
crowdfunding which will come into force on 1 April. Equity
crowdfunding will allow businesses to raise up to $2 million from
investors, via a licensed crowdfunding platform, without the need
for a formal prospectus or prescribed investment statement.
Commerce Minister Craig Foss announced today that there will be
no individual caps on the amount any investor may invest in a
company raising funds via a licensed equity crowdfunding platform,
provided however that a company will only be permitted to raise up
to $2 million in any year.
Wynn Williams has made a number of submissions on investor caps,
as well as meeting with MBIE and Minister Foss, and has voiced
strong support of no individual investor caps.
Companies that have been successful in raising funds through
global equity crowdfunding platforms have demonstrated that initial
momentum is critical in a successful capital raise. Attracting
cornerstone investors, and channelling them through the
crowdfunding platform, is an important part of providing this
initial momentum. Individual investor caps could hinder this
initial momentum and affect the viability of equity crowdfunding in
Investor protection is important, and the licensing regime under
the Financial Markets Conduct Act 2013 and the regulations will
provide a necessary level of investor protection.
Cabinet Press Release:
Commerce Minister Craig Foss today announced Cabinet has
approved regulations for crowd funding and peer-to-peer lending as
part of the Government's financial market
Mr Foss has announced that there will be no investor caps for
equity crowd-funding, other than the previously announced $2
million cap that a company can raise through crowd funding each
"Crowd funding provides a platform where contributors
receive shares in the businesses they invest in, providing a new
avenue for early-stage and growth companies to source the
risk-capital they need to grow," says Mr Foss.
Under the new regulations, offers engaging in equity crowd
funding and peer-to-peer lending will no longer need to prepare a
prospectus or an investment statement before fund raising from the
"This is an exciting development for both start-up
businesses and investors. With the regulations coming into force on
1 April, New Zealand will lead the Asia-Pacific region is the
development of crowd-funding regulation.
"Crowd-funding is one of several changes the Government is
making to support confident and informed participation in New
Zealand's financial markets.
"Implementing the Financial Markets Conduct Act is a key
component of the Government's Business Growth Agenda to build
New Zealand's capital markets and drive business growth,
exports and jobs," says Mr Foss.
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The Ministry of Corporate Affairs notified on June 5, 2015 that certain provisions of the Companies Act, 2013 shall not apply to private limited companies or shall apply with such exceptions or modifications as directed in the notification.
With the e-commerce boom and the growing trend of commercial transactions being concluded by way of internet, execution of contracts by electronic means has become quite prevalent.
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