News - 22 October 2018

New crowdfunding rules coming soon: OJK

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The Financial Services Authority (OJK) is set to issue a regulation on equity crowdfunding platforms by the end of the year in response to a boom of these platforms facilitated by financial technology (fintech) firms.

Under the planned regulation, a company using a crowdfunding platform is required to disclose its targeted capital and, if it fails to meet the target, the platform will return the funds to investors, unless it has stated a secondary lower target, said OJK capital market management director Luthfi Zain Fuadi.

“So let’s say a company is eyeing Rp 6 billion [US$395,900] but says it is could also use funds as low as Rp 5 billion. Then the company may keep the funds if their total value is over Rp 5 billion,” he said on Saturday as reported by kompas.com.

He added that a platform would be obligated to vet companies on behalf of the prospective investors before conducting a crowdfund.

“And only companies with less than Rp 10 billion in assets would be eligible for crowdfunding,” he said.

Luthfi said the draft regulation is currently being reviewed by the OJK board of commissioners, after which it will need approval from the Law and Human Rights Ministry before being put into action.

If passed, the new regulation will add on to an umbrella regulation issued by the OJK in 2016 on the direction of fintech firms operating in Indonesia. This regulation stipulates, among others, for all fintech firms to be registered with the OJK and to be transparent about their financial activity. (nor/bbn)

Source: The Jakarta Post