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Authored by: Ming Chiu Li and Alan Lo
The Financial Services and the Treasury Bureau (FSTB) has recently issued a consultation paper on proposals to enhance regulation of crowdfunding activities.
In the absence of a specific piece of legislation targeted at crowdfunding activities, these activities are currently subject to existing regulations in Hong Kong insofar as such regulations are relevant. For example, equity or debt crowdfunding activities are covered by the regulatory framework governing the offer of “securities” including the Securities and Futures Ordinance (Cap. 571) (SFO) and the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32). As such, to regulate crowdfunding activities, the FSTB recommends new measures, which in its view will increase the transparency and accountability of these activities and prevent unlawful acts and safeguard the interests of those involved.
The key points of the proposals are:
These proposals may be seen as a step to add to the existing measures to safeguard public interest and national security. When these proposals become effective, some activities may become “unlawful crowdfunding activities”, for example, when no prior consent is obtained from the CAO, or the CAO and relevant law enforcement agencies have reasons to believe that the continued conduct of such activities will jeopardise public interests, public safety or national security.
The FSTB is inviting comments on the proposals, to be received no later than 20 March 2023.
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