Opportunity for SMEs / Startup to raise fund via Crowdfunding, regulated SEC Thailand
Funding is significant part of the business and usually SMEs / Startup might not be able to access the resource of fund especially Bank loan as newly established SMEs / Startup may not have sufficient support such as annual report, collateral etc. However, new opportunity in Thailand for SMEs / Startup is to raise fund via Crowdfunding.
Notwithstanding, to raise fund via Crowdfunding is considered as offering to public which used to be strictly restricted except it is done by listed company as mostly known as IPO.
Therefore, to facilitate the realistic practice in Thailand, Securities and Exchange Commission (SEC) has issued new regulation to strengthen SMEs / Startup in Thailand, allowing SMEs / Startup to raise fund via Crowdfunding with the following limitations:
- Limitation of investment losses
– Retail Investor:
The company can raise funds from retail investors up to 20 million baht in the first 12 months and the total funding limit is not more than 40 million baht (including stocks and debentures) and invest not more than 100,000 baht per one company and the total investment capital of up to 1 million baht per year (including both equities and bonds).
– Non-Retail Investor: No Limit
- Creating an understanding of investment risks
For investing in crowdfunding carries different risks than investing in publicly traded securities. Investors must understand and acknowledge the risks before investing. Retail investors are required to pass a knowledge test before investing, while Non-Retail Investors can decide whether to take the test or not.
- Determination of conditions of fundraising
The all-or-nothing principle is applicable to an equity-crowdfunding, which means that a crowdfunding funder will receive money from investors only when a specified amount is raised. If not complete, the fundraising must be cancelled. and pay back to investors
Nevertheless, the All-or-Nothing principle will not apply for debt-based crowdfunding (debenture) if it can raise 80% of the offering amount. Fundraiser can then accept the funds raised to run a business or business project. The funding portal must disclose and inform investors of the conditions before making a subscription.
For further information regarding Fund Raising for your business in Thailand, please feel free to contact our corporate lawyer at:
Line: @wlaw
Email: contact@w-lawthai.com
Tel: 026240555
