Sebi ready to finalise crowdfunding norms

New Delhi: Securities and Exchange Board of India (Sebi) is about to finalise the final norms associated with crowdfunding, almost three years after first analysing the popular investment channel.

According to a report published in the business daily Mint, a limit of 25 percent will be set by the market regulator for the investors willing to invest through the crowdfunding channel.

The investors will also be asked to seek prior nod from the regulator before investing through such platform and relax disclosure norms.

The report quotes sources saying that the any company that will be attracting investment of over 200 investors through crowdfunding mode will be exempt from the private placement norms of the Companies Act as well. The Sebi norms may ask such a company (with more than 200 investors) to make a public offer and get listed on a recognized stock exchange.

On August 3, a 10-member panel, headed by Manipal Global Education chairman T V Mohandas Pai, was set up to examine and advice Sebi and recommend about fintech solutions for further widening and deepening of Indian securities market through financing platforms, both traditional and alternative like peer-to-peer lending and equity crowd-funding.

What is crowdfunding?

Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture. Crowdfunding makes use of the easy accessibility of vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together.