Crowdfunding expands the list of options

T + T – normal size

The Securities and Commodities Authority has confirmed that the crowdfunding platform expands the list of options available to project owners, entrepreneurs and owners of innovative ideas through 4 methods of financing.

She explained that the financing methods include bank loans, crowdfunding based on lending in accordance with the requirements of the Central Bank, in addition to venture capital funds according to the requirements of the Securities and Commodities Authority, and finally crowdfunding based on crowdfunding platform ownership. after the conditions and requirements have been met.

She indicated that trading in the crowdfunding platform is limited to raising funds for the purpose of establishing a company or increasing the capital of a company, with the need to refrain from selling or relinquishing partners’ shares do after incorporation to other investors through the platform.

ownership interests

And the crowdfunding system is summed up in the development of a mechanism that enables the project owner to obtain specific amounts of money from investors in exchange for the acquisition of ownership shares in a company established after the success of the financing process or by the capital of an existing company, and this is done through a platform and an electronic system for displaying crowdfunding requests To the public, according to specific provisions that guarantee the rights of everyone, whether the platform operator, the funding applicant, or the investor .

Use savings

The platform is seen as a collective and collaborative financing process, and the application of the new system will benefit investors by using savings and obtaining a return on their investments, as well as for those seeking financing through an alternative to to provide ownership to them. based financing as an alternative to bank financing or financing by the capital market, and for platform operators in the form of Operation financial resources, in addition to gaining experience, transactions and hiring human resources to carry out the activity.

The system makes it possible to attract funds, whether from individuals within the country or funds from abroad, and bridge the funding gap for small and medium enterprises, which in turn will support economic growth and improve levels of financial inclusion.

sectors

The government has confirmed that the new system will have a direct impact on a number of sectors, such as the private sector by engaging in the activity of operating the crowdfunding platform, or financing its projects through it, and the investment and industrial sector by individuals. to encourage local and foreign capital to invest in projects within the state. Direct impact on small and medium enterprises by finding a way for owners of ideas and projects to launch their small and medium projects and fund innovative ideas through the crowdfunding platform.

competitive

The SCA expected that the adoption of the crowdfunding system would have a positive impact on the country’s position in competitiveness reports, such as the Global Competitiveness Report issued by the World Economic Forum by the axis of local market size and the index of advanced financial markets. , innovation, as well as the Global Digital Competitiveness Report issued by the International Institute for Administrative Development through the axis of technological development and its regulatory framework.

There is also a report on the Global Competitiveness Yearbook issued by the International Institute for Management Development on the themes of effective performance of the local economy, efficiency of business legislation and business productivity.

The list includes the Wealth Index Report issued by the Legatum Institute on the Axis of the Open Economy in terms of the business environment, investor protection, business financing, project development through market competitiveness and business creation environment, access to markets and infrastructure, in addition to the efficiency of the economy in terms of productivity and competitiveness.

The SCA explained that the concept of crowdfunding, in accordance with Cabinet Decision No. (36) of 2022, is a way that enables the applicant, whether a natural or legal person who wants to obtain funding for his idea or project, to obtain amounts. of money from investors for the purpose of financing his project through the platform. She indicated that the Cabinet’s decision on crowdfunding applies to all crowdfunding activities taking place in the country, including free zones.

Terms and requirements

The authority has made it clear that any natural or legal person wishing to fund his idea or project can go to the crowdfunding platform operator to place the idea or project on the platform to obtain ownership-based financing, once the conditions and requirements have been met.

The conditions include the need to obtain the necessary initial approvals for the project to be presented on the platform from the competent authorities, and the disclosure during the funding request period of information related to the project, the exit mechanism and all information that required of investors, refrain from presenting the financing request on more than one platform at the same time, and refrain from submitting its offer in any way. Another way for off-platform investors, and the total amount of financing requests for him and his related entities should not exceed 2.5 million dirhams within a year and 5 million dirhams by the term of the company.

small projects

Cabinet’s crowdfunding decision will support small and medium-sized enterprises that are having difficulty obtaining the necessary financing through loans due to their inability to provide the necessary guarantees and required documents.

comparison

Crowdfunding platforms enable owners of ideas and projects from natural and legal entities to present their projects on the platform to investors who want to use their capital and savings in investment opportunities and promising ideas.

It helps to compare different investment opportunities; And then go into projects that they see economic feasibility and good indicators.

Pressure
Email




Leave a Comment