Crowdfunding in Hong Kong

There has been recent news coverage on how "crowdfunding" is taking off globally as a means of raising money from investors in relatively small amounts. The US Securities and Exchange Commission has released a set of proposed rules for exempting certain crowdfunding activities from registration requirements. In Hong Kong, some crowdfunding sites are generating interest. To date the SFC has not made a public statement about the trend. Operators of crowdfunding businesses need to consider all the relevant regulatory implications, including:

• whether the crowdfunding offering amounts to a "collective investment scheme"
• whether the operator of the website / platform would be seen to be conducting a regulated activity requiring a licence from the SFC, and
• whether the operator would be considered to be carrying on a money lending business requiring a money lender licence from the Hong Kong Companies Registry.

This list is not exhaustive and other regulatory issues need to be considered. Crowdfunding promoters should seek formal legal advice before commencing operations in Hong Kong.