The Securities and Exchange Commission has again warned investors about the activities of unregistered investment crowdfunding platforms.
Crowdfunding is the process of raising funds to finance a project or business from the public through an online platform.
A crowdfunding portal is a website, portal, intermediary portal, application, or other similar modules that facilitate interaction between fundraisers and the investing public
In a circular released on August 3, 2022, the SEC states that it has observed with concern the fraudulent activities of some unregistered investment crowdfunding platforms and hereby strongly advise the investing public against making investment(s) with or through any crowdfunding platform not registered with the Commission.
The Commission stated that in recognition of the potential and importance of crowdfunding platforms and the need to protect investors through effective regulation, had in January 2021 published its crowdfunding rules and requested well-intending crowdfunding platforms to register with the commission and comply with the Rules by June 30, 2021.
The commission in the recently released rules on Crowdfunding noted that “Micro, Small and Medium Enterprises (MSMEs) incorporated as a company in Nigeria with a minimum of two years operating track record should be eligible to raise funds through a crowdfunding portal registered by the commission.”
The commission noted that the maximum amount, which might be raised by a medium enterprise shall not exceed N100 million.
“The maximum amount, which may be raised by a small enterprise shall not exceed N70 million; and the maximum amount, which may be raised by a micro enterprise shall not exceed N50 million.