The Securities and Exchange Commission (SEC) has empowered crowdfunding portals to act as registrars of qualified institutional and individual buyers by issuing Memorandum Circular No. 12, Series of 2023. Through the said issuance, SEC introduced amendments to Section 39.1.4.1 of the Implementing Rules and Regulations (IRR) of the Securities Regulation Code (SRC).

Specifically, the amendment adds funding portals, registered under the SEC Crowdfunding Rules, in the list of authorized registrars of qualified institutional and individual buyers, provided they have been granted the appropriate secondary license by the SEC, upon proper application and compliance with registration requirements.

A funding portal is an intermediary organized and registered as a corporation to facilitate transactions involving the offer or sale of crowdfunding securities through online electronic platform. It does not:

i.                    Offer investment advice or recommendations; 

ii.                  Solicit purchases, sales or offers to buy the securities displayed on its platform;

iii.                Compensate employees, agents, or other persons for such solicitation or based on the sale of securities displayed or referenced on its platform; or

iv.                 Hold, manage, possess, or otherwise handle investor funds or securities.

According to Memorandum Circular No. 14, Series of 2019 or the SEC Crowdfunding Rules, no entity shall act as a funding portal unless it is registered as such with the SEC. It shall comply with the following requirements:

1. Shall be organized as a corporation and registered with the SEC;
2. Shall have paid-in capital of at least PhP5,000,000, subject to expenditure- and risk- based minimum capital requirements;
3. Registration Statement which would include information concerning:
   1. Funding portal’s principal place of business;
   2. Funding portal’s legal status and disciplinary history, if any;
   3. Business activities, including types of compensation the funding portal would receive;
   4. Control affiliates of the funding portal and disclosure of their disciplinary history, if any; and
   5. Funding portal’s website address(es) or other means of access.
4. Account Opening and Disclosure Rules; and 
5. Business Conduct Rules

Moreover, a funding portal is mandated to comply with the requirements of the following laws and rules:

1. Anti-Money Laundering Act of 2001, as amended and its IRR;
2. Revised Code of Corporate Governance of 2009, and its IRR;
3. 2015 SRC IRR Rule 30.2.1.2.4.2 as they apply to brokers; and
4. Data Privacy Act of 2012.

If a funding portal intends to act as an authorized registrar of qualified buyers, it shall inform SEC in writing of such intention by filing SEC Form 39-Registrar before it can perform the duties and responsibilities of a registrar.

The duties and responsibilities of an authorized registrar are further provided in SRC IRR – 39.1.4. Rules Governing Registrars of Qualified Institutional and Individual Buyers.

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