FMA to grant first equity crowdfunding licences
The long wait for entrepreneurs wanting to take advantage of equity crowdfunding is almost over.
Financial Markets Authority (FMA) spokesman Andrew Park said the financial regulator was on track to grant its first licences to equity crowdfunding platforms within the next fortnight.
A law change in April allowed entrepreneurs to sell shares to the public and borrow money from them with little red tape through licensed crowdfunding and peer-to-peer lending platforms.
However, the FMA has yet to grant any licences, resulting in a lag in businesses being able to take advantage of the new rules.
Park said the FMA had received five applications and 16 expressions of interests from equity crowdfunding and peer-to-peer lending platform providers and was on track to grant its first licences in a week or two.
Under the new rules, businesses can raise up to $2 million a year by issuing shares or borrowing from the public through licensed platforms without issuing a formal prospectus or facing the usual FMA scrutiny.
Commerce Minister Craig Foss said in February that New Zealand was leading the Asia-Pacific region in introducing the liberal funding regime.
Executives at two crowdfunding companies, PledgeMe and FundaKiwi, said the licensing process was taking longer than the FMA had expected, but it was a new process for all parties and there was a general acceptance by the industry of the time being taken.
FundaKiwi chief executive Clive Fernandes believed it might take a year for businesses and investors to fully get their heads around equity crowdfunding and for the funding mechanism to take off. Because of that it probably didn't matter much which crowdfunding companies got licences first.
PledgeMe "chief bubble blower" Anna Guenther said some companies were a little sad licensing was taking longer than they had expected but it was no-one's fault.
"Everything has been bit slower on all sides than expected [but] we are building a new industry," she said.
- The Dominion Post