GLT Law Advised Mystartr On Its Registration As A Licensed Equity Crowdfunding Platform

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Mystartr equity crowdfunding licensed operator

Petaling Jaya, 18 May 2019Mystartr Sdn Bhd, the largest reward-based crowdfunding platform based in Malaysia has been approved by the Securities Commission (“SC”) on its application to become a licensed equity crowdfunding platform (more formally known as “Recognised Market Operator”, “ECF”).

Mystartr, now a licensed equity crowdfunding platform, is one of the three companies that received such approval from Datuk Syed Zaid Albar, Chairman of SC and was witnessed by the Minister of Finance, YB Tuan Lim Guan Eng at the event held at the SC yesterday. The other 2 companies are 1337 Ventures and Ethis Ventures.

The SC also announced five new peer-to-peer (P2P) financing platforms (CapitalBay, Capsphere Services, Crowdsense, MicroLEAP and Money Save Capital).

Prior to this, the SC had awarded ECF registration to 7 companies since June 2015 (Alix Global (FundedbyMe), Ata Plus, Crowdo, Eureeca, pitchIN, CrowdPlus Asia and Fundnel).

With the addition of 3 companies that received approval yesterday, the Malaysian market will now see 10 active ECF players and this move will, in the words of the SC Chairman:

“facilitate the development of innovative digital solutions which democratise access to investments while broadening financing options available for all Malaysians. The introduction of ECF and P2P financing provides an alternative source of capital for micro-small-and-medium enterprises (“MSMEs”) to fund business expansion, finance working capital and meet other financial requirements”.

GLT Law had the pleasure of working with the highly motivated and driven team from Mystartr on the registration application process.

The team was led by our corporate and technology partner Edwin Lee and supported by associate Kelvin Wong and legal executive Martin Liau. They provided advice on the registration process, regulatory compliance and assisted on the drafting and designing of various key operational documents.

Mystartr has been running a highly successful reward-based crowdfunding platform since its inception, having helped more than 800 projects to secure more than RM1 million in funding. Mystartr plans to combine its existing reward-based crowdfunding platform with the new equity-based crowdfunding platform into a single platform with the hope that such an innovative platform will offer a more rewarding and fulfilling experience to its users and investors. It plans to operationalise the new platform within the next 3-6 months.

Some background history of crowdfunding initiatives in Malaysia:

Crowdfunding offers a new/alternative way of fundraising whether for business or philanthropic purposes.

The funds originate from a crowd of individuals, who invest in a cause/business/project that they believe in. It is a new form of fundraising platform that allows startups or other MSMEs to obtain funding through small equity investments from a relatively large number of investors, using online portals to publicise and facilitate such offers to investors.

Through ECF, investors will receive shares in return for their investments and can expect a return in the form of dividends if the company performs well. It allows even individual investors opportunities to invest and own certain shares in a company, which were previously only available to institutional investors such as private equity or venture capital firms. Such investment, however, also comes at a higher risk, as investors may receive nothing if the business they invest in fails.

Development of ECF since 2015:

There has been a steady increase in the number of campaigns launched and the number of funds raised through the ECF platforms. We extracted the following key statistics from the SC’s website (as of March 2019):

 

New developments in 2019:

The SC also released a new property crowdfunding framework following amendments made to its Guidelines on Recognized Markets. This is pursuant to an initiative announced in Budget 2019 to provide an alternative financing avenue for first-time homebuyers.

Property crowdfunding offers the same potential as that of ECF and P2P financing platforms in providing an alternative source of financing but is specifically tailored for first-time homebuyers. At the same time, it will provide investors access to a new investment option.

During the Budget 2019, the new Pakatan Harapan Government also announced that the Government is setting up an RM50 million co-investment fund to co-invest in Campaigns launch by these ECF platforms.

At the Fintech Roundtable yesterday, the SC confirmed that it is currently working on that scheme and will formally announce it to the public by Q3 or Q4 of 2019.

The announcement of more ECF and P2P operators marks a progressive milestone by the Government in bridging the gap between investors who want to invest in MSMEs who have great projects or business plans but lack of funding. This will certainly help Malaysia to create a thriving entrepreneurial ecosystem.

Disruptive technologies have changed the way we live and do business. The emergence of ECF and P2P is yet another innovative example of how technologies are disrupting the traditional means of funding, democratizing access to capital as well as offering up more investment opportunities to everyone.

GLT Law, a Financial Times Innovative Lawyers 2019 (Asia Pacific Commended Law Firm) is in full support of disruptive technologies that bring enormous benefits to people and companies that have great ideas to change the world.

 

About GLT Law:

GLT Law is a law firm in Malaysia focusing its practices in areas such as corporate and commercial. Other areas include litigation, privacy and Internet, blockchain technology as well as real estate and property.
It sets its direction to be an innovative and forward-thinking law firm by leveraging and incorporating cutting-edge technology into legal practice, in order to bring innovative solutions and provide better customer experience to its clients.
It recently won the ALB Malaysia Law Award: Transactional Boutique Law Firm of the Year 2019 and received a “commended” ranking by the Financial Times for its work on innovative legal tech products.
For more information about GLT Law, visit https://gltlaw.my/

 

About Mystartr:

Mystartr is a Malaysian reward-based crowdfunding platform. It started its operation since 2012 with the objective to build a funding platform for dreamers to bring their creative projects into reality.
Mystartr has hosted all sort of funding campaigns from films, games, music, art, design to technology, no matter the size of the project. These campaigns have received funding from supporters and backers, who pledged in money to support the dreamers. In return, these dreamers will use the funds raised to build their products and contribute back to the community.
Mystartr also runs a highly successful startup competition (圆梦工场 Dream Factory) and recently started a new media company (Dream Circle Media).
For more information about Mystartr, visit https://www.mystartr.com/

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