Nigerians have once more been cautioned by the Securities and Exchange Commission (SEC) about the actions of unregistered investment crowdfunding platforms.
Crowdfunding is the practice of soliciting contributions from members of the public using an internet platform in order to finance a project or company.
A website, gateway, intermediary portal, application, or other comparable components that promote communication between fundraisers and the investing public are known as crowdfunding portals.
The SEC advised the investing public strongly not to make investment(s) with or through any crowdfunding platform not registered with the Commission in a circular issued on August 3, 2022, noting that it had observed with concern the fraudulent activities of some unregistered investment crowdfunding platforms.
The Commission stated that it had published its crowdfunding rules in January 2021 and asked well-intentioned crowdfunding platforms to register with the commission and comply with the Rules by June 30, 2021 in recognition of the potential and importance of crowdfunding platforms as well as the need to protect investors through effective regulation.
“Micro, Small and Medium Enterprises (MSMEs) incorporated as a firm in Nigeria with a minimum of two years operating track record should be eligible to seek funds through a crowdfunding platform approved by the commission,” the commission stated in the recently published regulations on crowdfunding.
The commission highlighted that a medium-sized business may not raise more than N100 million at a time.
The maximum amount that a small business may raise cannot exceed N70 million, and the maximum amount that a microbusiness may raise cannot exceed N50 million.
