SEC approves Investree as country’s first crowdfunding portal
By Revin Mikhael D. Ochave, Reporter
THE Securities and Exchange Commission (SEC) gave the go-signal for Investree Philippines, Inc. to start operating a crowdfunding platform that plans to link small, medium and emerging enterprises with banks and other lending institutions.
In a statement on Thursday, the SEC said Investree’s application to function as a funding portal and serve as a crowdfunding intermediary had been approved during the commission’s meeting on Dec. 22.
“The registration of Investree as crowdfunding intermediary and funding portal shall be valid for one year, subject to a review by the commission of the actual operation of the crowdfunding portal during the first 11 months for possible extension,” the SEC said.
Investree is the first crowdfunding intermediary and funding portal that registered with the SEC since the guidelines on crowdfunding took effect in July 2019. The company is a joint venture between Filinvest Development Corp. and Investree Singapore Pte. Ltd.
According to the SEC, crowdfunding is a fundraising act that is usually conducted via an online platform for startups and small and medium enterprises.
Three parties are involved, namely: the entrepreneur or project initiator, supporters or those who will fund the project, and the platform that consolidates the entrepreneur and supporters to realize the business project.
SEC said crowdfunding may be lending-based, where money from supporters will be lent to the entrepreneur and receive a legally binding document to repay the loan at a certain time and interest rate.
Similarly, crowdfunding can be equity-based, where supporters invest in shares sold by the entrepreneur and gain a share of the profits.
“Crowdfunding may also be donation-based, where supporters pool their resources to support a charitable cause; or reward-based, where supporters give money in exchange for a ‘reward,’ usually a product produced by the project initiator,” the SEC said.
Among the types of crowdfunding, SEC said Investree will operate a lending-based platform. Its lenders will be banks or qualified buyers, while the borrowers will be limited to small, medium, and emerging enterprises.
“Lending-based and equity-based crowdfunding activities involve the offer of securities in the form of debentures or shares. As such, they are subject to securities regulation in many jurisdictions,” the SEC said.
Under Republic Act No. 8799 or the Securities Regulation Code, securities are not allowed to be sold or offered for sale or distribution without the necessary registration statement approved by the SEC.
However, the SEC said crowdfunding rules provide an exemption from the registration of crowdfunding securities as long as the issuer, intermediary, and investors comply with certain rules.
“Under the rules provided through SEC Memorandum Circular No. 14, Series of 2019, a crowdfunding intermediary may be a registered broker, investment house or funding portal, which mediates the offer and sale of crowdfunding securities through an online, electronic platform,” the SEC said.
