SEBI issues consultation paper on crowdfunding

India Infoline News Service | Mumbai |

SEBI has also proposed that only ‘accredited investors’ be allowed to participate in crowdfunding activities

The Securities and Exchange Board of India, on Tuesday, proposed new norms for ‘crowdfunding’ or collection funds through web-based platforms and social networking sites.

The objective is to help start-up companies raise capital and also check misuse of such avenues.

Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project, business venture or social cause.

According to the proposed norms, crowdfunding platforms can be provided by only SEBI-registered entities, while companies can raise up to Rs.10 crore in a year through this route.

SEBI has also proposed that only ‘accredited investors’ be allowed to participate in crowdfunding activities.

The crowdfunding investment of retail investors would be capped at Rs. 60,000 or 10% of their net worth.

Those engaged in real estate and financial sector businesses would be denied from tapping this route.

The final norms would be issued after taking into account comments from public and other stakeholders till July 16.
 

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