Regulations for Offers of Securities (prospectus requirements)

Do I need a prospectus to do crowd sourcing?

According to MAS (Consultation Paper)
last revised on February 2015

Currently, any offer of securities is required to be made in or accompanied by a prospectus unless it qualifies for an exemption under Part XIII of the SFA.

Further, intermediaries which deal in securities, including an intermediary operating an SCF (securities-based crowdfunding) platform which facilitates offers of securities, are required to hold a Capital Markets Services (“CMS”) licence under the SFA, unless exempted. Such an intermediary may also be deemed to be carrying on other regulated activities, such as advising on corporate finance if it provides advice to the person making an offer of securities, or providing financial advisory services under the Financial Advisers Act (“FAA”) if the intermediary provides financial advice to investors on the securities.

"Fund-raising companies listed on SCF (securities-based crowdfunding) platforms may make small offers (i.e. raising less than $5 million within 12 months) without issuing a prospectus (an investment offering document). But they must disclose the key risks (as prescribed by MAS at a minimum) of such investments to all investors."

"For donation-based and reward-based crowdfunding, MAS’ regulations do not apply."

Source: Rivkin

SCFs should also ensure the validity of small offers, by checking that there are no instances of aggregation by one entity, or amongst closely related offers.

According to MAS (Guideline)
last revised on October 2018

In ascertaining whether the amount of funds raised from offers made in reliance on the exemption under section 272A

(1) of the SFA exceeds the S$5 million limit, the person making the offer is required, under section 272A(5), to aggregate –

    • (a) all amounts raised by him from offers of securities or securities-based derivatives contracts issued by the same entity; and
    • (b) all amounts raised, whether by him or by another person, from offers of securities, securities-based derivatives contracts, or units in a collective investment scheme which are closely related offers,

made within the last 12 months in reliance on the small offers exemption.


Lending-based crowdfunding

According to MAS (FAQ)
last revised on October 2018

Fundraising from the public through lending-based crowdfunding, or P2P lending, is regulated by MAS under the Securities and Futures Act (Cap. 289) (the “SFA”) and the Financial Advisers Act (Cap. 110) (the “FAA”).

Under section 239(3) of the SFA, any invitation to lend money to an entity (e.g. a company) is deemed to be an offer of debentures, which is a type of security.

Therefore, prospectus requirements apply.