Minister of State for Finance Kwasi Thompson revealed yesterday that the Cabinet recently approved the Securities Commission of The Bahamas’ (SCB) rules for crowdfunding, paving the way for a new source of fundraising for micro, small and medium-sized enterprises (MSMEs).
The SCB also released a statement yesterday noting that businesses can raise up to $5 million within a single 12-month period through crowdfunding and through no more than two securities distributions.
According to the SCB, businesses that are categorized as an MSME are those with a gross income up to $3 million.
In a press conference heralding the good news for local entrepreneurs, Thompson said crowdfunding will be a modern, inexpensive way for businesses to raise money from many investors.
“These reforms represent a game changer for business ownership and entrepreneurship in our country,” said Thompson. “With these new and innovative crowdfunding regulations, we are furthering the potential of MSMEs to raise more investment money on the private capital market. We are breaking down the walls that were once only able to be traversed by big corporate players. A new wave of possibilities for Bahamian ownership and entrepreneurship is here.”
According to the SCB, its crowdfunding rules reduce the regulatory burden that comes with the public offering of securities and is less expensive in terms of regulatory filing costs with the commission.
Executive Director of the Securities Commission Christina Rolle said in the SCB statement that MSMEs have lamented the cost of raising capital in The Bahamas, which has limited growth and in some cases led them to shutter. Now, not only can small and large investors help to sustain these businesses, they can expand their portfolios.
“Investors continue to seek greater diversity of investment products to choose from, to grow their personal wealth in alignment with their investment principles and personal philosophies,” said Rolle.
“They also want confidence that they are protected from unfair practices, market misconduct and other securities and investment fraud. These rules address both sides of this coin, easing access to capital for many entrepreneurs on one side, and providing an appropriate protection regime for retail investors – in keeping with key regulatory standards and best practices – on the other. We are pleased they are finally a formal element of the capital markets regulatory regime, particularly as we seek to recover from the economic impact of the COVID-19 pandemic and the devastation brought by Hurricane Dorian in 2019.”
The SCB statement explains that retail investors (non-accredited investors) will be able to invest up to $10,000 per crowdfund distribution, or up to $50,000 over a single 12-month period. The SCB added, “Securities purchased under a crowdfund offering may be sold or traded without restriction in the secondary market where that security is sold or traded, through an intermediary registered with the Commission as a restricted marketplace.”
The Bahamas International Securities Exchange (BISX) is considering its own type of crowdfunding mechanism, its Chief Operating Officer Holland Grant told Guardian Business yesterday. He said, though, that BISX is in the very early stages of development.
“I’m incredibly happy that the commission and the Ministry of Finance have thought to do this because truth be told, something that holds companies back from growing to their critical mass is lack of capital,” Grant said.
“A lot of entrepreneurs are able to build up a business through that $1 million and $3 million investment range, but that financing to take the next step is sometimes missing and that’s something we’re happy to see the government, Ministry of Finance, Securities Commission streamlining and going further.”
The post Crowdfunding ready to go after Securities Commission rules ratified appeared first on The Nassau Guardian.
source https://thenassauguardian.com/crowdfunding-ready-to-go-after-securities-commission-rules-ratified/
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