Singapore: IOSCO Crowdfunding 2015 Survey Responses Report

Last Updated: 19 February 2016
Article by Eric Chan


In late Dec 2015, the International Organization of Securities Commissions ("IOSCO") released a report ("Survey Report") summarising its findings following a survey of twenty three IOSCO members concerning regulation of crowdfunding.

The following key points were highlighted in the Survey Report:

  • Regulatory approaches to crowdfunding;
  • Capital requirements for crowdfunding activities in various jurisdictions;
  • Regulations for the marketing of a crowdfunding platform versus marketing of offering;
  • Conduct of due diligence of the offering;
  • Issuer disclosure requirements;
  • Offering document disclosure requirements; and
  • Investor eligibility requirements.

(i) Regimes for Regulating Crowdfunding

Jurisdictions surveyed reported two broadly different approaches. Some jurisdictions sought to apply their general securities regulatory framework, which often allows the use of certain built-in flexibilities such as waivers from licensing or registration and/or prospectus publication related requirements. Other jurisdictions have introduced ad hoc regulatory regimes to address the phenomenon of raising capital via crowdfunding. So far, Singapore falls into the first group – currently capital raising via crowdfunding is subject to the same regulatory regime of the Securities and Futures Act ("SFA") as capital raising by conventional means.

(ii) Capital and Insurance

On the issue of capital and insurance, some jurisdictions have made specific revisions of existing capital requirements to cater to crowdfunding activities. In Singapore, the Monetary Authority of Singapore ("MAS") appears to be doing likewise. In a Consultation Paper published in Feb 2015 ("MAS Paper"), the MAS has proposed to lower the minimum base capital requirement from S$250,000 to S$50,000, and to also remove the requirement for a S$100,000 security deposit.

(iii) Regulating the Crowdfunding Platform versus Regulating the Offering

With respect to regulations concerning marketing, regulators have sought to distinguish between the marketing of the crowdfunding platform and the marketing of a particular offering. Specific measures regarding solicitations and recommendations, disclosure of compensation as well as objective criteria for the selection of projects have generally been implemented or proposed. For example, crowdfunding portal managers are sometimes forbidden from advising or making recommendations as well as from soliciting purchases.

In Singapore, MAS has clarified in the MAS Paper that under Singapore's existing regulatory regime, a person who makes offers of securities in reliance on statutory prospectus exemptions must comply with statutory restrictions against advertising, or making statements in relation to specific offering available on the crowdfunding platform. However, MAS did say that this does not mean that the platform operator cannot advertise or promote the platform itself. This sort of promotional effort can include information about the platform and the way the platform operates, so long as no information is included on specific offers.

(iv) Conducting Due Diligence on the Offering

To reduce incidences of fraud, IOSCO noted that some regulators have requirements relating to the crowdfunding platform's role in the offering and that regulatory regimes might require some due diligence on the offerings in terms of mandatory review, disclosure and reporting to the regulator.

(v) Issuer Disclosure Requirements

In terms of disclosure requirements, a number of jurisdictions have specific disclosure requirements relating to the risks of crowdfunding offerings. These risks include liquidity, the absence of a secondary market, restrictions on the ability of an investor to cancel the investment, the risk of not getting expected performance on the securities purchased, risk of not being able to influence management of the issuer, dilution risk and inability to obtain a return on the investment.

In jurisdictions that require crowdfunding issuers to report, the issuers are usually required to comply with customary continuous disclosure requirements. In jurisdictions where the crowdfunding issuers are not required to report, the regulatory requirements may range from exemption to notification in case of changes and following prescribed documentation.

(vi) Offering Document Disclosure Requirements

For crowdfunding offerings completed on a non-exempt basis (i.e. by prospectus), some jurisdictions prescribe specific disclosure requirements. These may include disclosures as to intended use of proceeds, capital structure and ownership of the issuer, and certain related party transactions. In addition, some other jurisdictions prescribe the form and content of crowdfunding offering documentation.

Due to the costs and resources involved in preparing a prospectus and the small size of the fundraising exercise, in Singapore MAS has tentatively indicated in the MAS Paper that it would allow offerors to rely on the Institutional and/ or Accredited Investors prospectus exemptions. Reliance on these exemptions would be subject to the usual restrictions on advertising of the offering etc.

IOSCO also noted that a number of jurisdictions (including Singapore) require or are proposing to require financial statements in crowdfunding offering documents, either as part of the regulations relating to crowdfunding offerings or through company law or other regulations. As to whether the financial statements have to be reviewed by external auditors and the nature of the review, this would generally depend on the size of the offering and/or other defined factors. Furthermore, in some jurisdictions, not only are financial statements required within the crowdfunding offering document, the issuer may also be required to provide a narrative discussion of its financial condition within offering document.

(vii) Investor Eligibility Requirements

In most jurisdictions with special crowdfunding frameworks, there are similarities in the approach towards investor protection. These protections range from limitations on the amount that may be invested, to education requirements, risk warnings, cancellation rights and/or other jurisdiction specific protections.

In the Singapore context, MAS has proposed in the MAS Paper to limit the applicability of the prospectus exemptions to restricted access platforms, and these platforms must conduct due diligence on investors to ensure that they are within the scope of the prospectus exemptions (e.g. to verify that the investors are accredited or institutional investors).


Apart from the key elements highlighted by IOSCO, in the Singapore context, there are also some related legal issues that one must consider.

(i) Deposit Taking under the Banking Act

Distinct from bank licensing, the activity of deposit taking is also subject to specific regulatory controls under the Banking Act ("BA"). Section 4B(4) of the BA defines deposit very widely. A bank deposit is, by nature, a loan of money by the customer to the bank, so that the bank becomes a borrower and the customer the lender. Because of this, as long as one takes money from another without giving in return a real asset or securities like stocks or bonds, this will be characterised as taking a deposit. There are restrictions under the BA with regard to a person taking deposits in the course of carrying on a deposit-taking business. Therefore, in the case of a crowdfunding platform that deals in debt (rather than equity), in taking money from investor participants and lending the money to debt issuers, there is the possibility that the platform operator is contravening the rules in the BA concerning deposit-taking.

(ii) Classification of Loans made through a Crowdfunding Platform as Securities under the Securities and Futures Act

General securities provisions under the SFA may apply depending on the type of business model of the crowdfunding platform. For example, lending-based crowdfunding models that involve the offer of securities in the form of debentures or shares will be subject to regulations under the SFA. For crowdfunding platforms that deal in debt, the loans that are transacted via the platform would typically be documented in a standard form document. This raises the question as to whether the loan note might be considered to be a security, such as to attract the application of the regulatory regime of the SFA. It is understood that some platforms currently active in Singapore rely on the fact that promissory notes are not considered to be securities under the SFA. However, it remains an open question as to whether the format in which the loan is documented suffices to render the instrument a promissory note.

It is also unclear whether MAS might in the future continue to exclude promissory notes from being regarded as securities under the SFA.

(iii) Business of Moneylending under the Moneylenders Act

For lending-based crowdfunding platforms, section 5 of the Moneylenders Act ("MLA") provides that a person who carries on the business of moneylending must hold a licence issued by the Registrar of Moneylenders. Given that a lending-based crowdfunding platform contemplates that the borrowers will either borrow from the platform (who would in turn be funded by lenders) or borrow directly from the lenders, there is a concern that the platform might either need a moneylending licence or be considered to have abetted investors to engage in a business of unlicensed moneylending. The issue does not arise where the borrowers are corporations (since the business of lending money to corporations no longer requires a moneylending licence). However, the issue remains if the borrowers are individuals, or small enterprises (since many of the latter operate as partnerships or sole proprietorships).

(iv) Providing Financial Advisory Services under the Financial Advisers Act

Section 6(1) of the Financial Advisers Act ("FAA") requires a person who provides financial advisory services to be licensed. Financial advisory services, as defined in Second Schedule of the FAA, include advising others concerning any investment product and the issuance of research reports on investment products. As the crowdfunding platform would include various information on a borrower/ issuer (primarily to help investors assess whether to participate in the loan/ equity investment), crowdfunding platform operators need to consider carefully whether the information it provides in relation to the issuers might cross the line such that it might be considered to have given advice on investing with the issuer or to have issued research on the issuer. This could then bring into play the licensing and regulatory requirements of the FAA.

(v) Secondary Trading of Loans

The MAS Paper mentions the lack of liquidity as a potential issue for crowdfunding platforms, which may result in investors facing the risk of not being able to readily exit their investments by selling their securities in a secondary market.

Some crowdfunding platform operators may thus want to include features that facilitate secondary trading of the investments. This in turn would bring into play the potential application of the regulatory regime for market operators in Part II of the SFA.


Without any international consensus on what would be an appropriate regulatory model, it would seem likely that MAS would proceed with considerable caution as it considers and refines its policy thinking in relation to the regulation of crowdfunding.

Whatever might be the eventual posture adopted, it is quite clear that this would be eagerly anticipated by all.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions