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!-- 1.5 Crowdfunding/crowdinvesting/crowdlending -->
FinTechs belonging to this category operate crowdfunding, crowdinvesting and crowdlending platforms on which money is raised to invest in various projects, mainly start-up companies and real estate projects.
Crowdfunding is not a defined financial service, but generally used to describe donation-based crowdfunding (the investor donates the money to the project), reward-based crowdfunding (the investor receives an often symbolic consideration for his investment), equity-based crowdfunding (crowdinvesting: the investor participates in the profits of the financed project or acquires shares or debt instruments) or lending-based crowdfunding (crowdlending: the investor is reimbursed at the end of the project with or without interest).
Introduction
Attitude of the country towards crowdfunding, crowdinvesting and crowdlending platforms
The SEC maintains a policy of encouraging investments and active public participation in the capital market while encouraging good corporate governance and ensuring the protection of investors. It has recognised crowdfunding as an avenue for raising capital and resources for small businesses and providing alternative investment opportunities to the investing public. To this end, the SEC has issued SEC Memorandum Circular No. 14 or the Rules and Regulations Governing Crowdfunding. It has also issued licenses to several crowdfunding enterprises allowing them to operate in the Philippines.
The BSP recognises the potential of crowdfunding as a key component of sustainable finance. On 8 February 2022, the BSP released the Philippine Sustainable Finance Roadmap and Sustainable Finance Guiding Principles where it recognised the need to include alternative markets, such as crowdfunding, to enable access to underserved areas.
Legal affairs
Obligations and requirements to provide crowdfunding, crowdinvesting and crowdlending platforms described above
A funding portal has to be registered under SEC Memorandum Circular No. 14 before conducting activities as a crowdfunding intermediary through an online electronic platform. A funding portal is an intermediary organised and registered as a corporation to facilitate transactions involving the offer or sale of crowdfunding securities through an online electronic platform. The funding portal cannot: (a) offer investment advice or recommendations; (b) solicit purchases, sales or offers to buy the securities displayed on its platform; (c) compensate employees, agents, or other persons for such solicitation or based on the sale of securities displayed or referenced on its platform; or (d) hold, manage, possess, or otherwise handle investor funds or securities.
The minimum paid-up capital is PhP5 million (approx. US$95,914). However, this is subject to the requirements of the Foreign Investment Act for Philippine corporations that are not Philippine nationals where a higher capital requirement of the Philippine Peso equivalent of US$200,000 needs to be met.