What Information Do Companies Disclose in Equity CrowdFunding?

Feb. 20, 2019

If you a company looking into Equity CrowdFunding, there are some information that you should disclose to the potential investors. These include the company’s business information, financial information, information of the securities offering and the risks involved in the business operations.

The SEC do not have regulations on the information that companies reveal through Equity CrowdFunding but they do need Funding Portals to strike an agreement with companies about the necessary information that is needs to be disclosed to investors for them to make decisions.

Firstly, there is the business information. The basic information such as the nature of the business, the product they sell or the service they provide and information about the management team and their backgrounds.

Secondly, there is the financial information. For existing companies, annual financial statements should be disclosed to investors to let them have a gauge of the company’s financial situations the trends. For start-ups, important information like the revenue streams and the projected financial numbers should be disclosed to give the investors a good idea of the company’s financial future.

Next, there is the information on the securities offering. Companies should disclose the terms of the securities and what will happen after the project is completed. Investors want to know the returns they will get per share they have invested in individually and the oversubscription.

To recap, oversubscription is only allowed if it doesn’t cause the offering amount during the 12 months as from the first offer to exceed 20 million Baht and provided that the offer for sale of securities for oversubscription is not larger than 25 percent of the offering amount. All of these will be calculated based on the offering price. (Notification of the Capital Market Supervisory Board No. TorJor. 7/2558 Re: Regulations on Offer for Sale of Securities through Electronic System or Network)

Lastly, companies should lay out clearly the risks that investors will have to take and the commitments they have to take on when they invest in the company. Investors must be cautious not to fall into the ‘herd behaviour’ whereby investors, especially retail investors, make biased investment decisions just because others have invested in the same project (Facilitating Equity Crowdfunding in the ASEAN Region, 2017).

References

Association of Southeast Asian Nations (ASEAN). 2017. Facilitating Equity Crowdfunding in the ASEAN Region. The ASEAN Secretariat Jakarta.

http://asean.org/storage/2017/09/Final-Facilitating-Equity-Crowdfunding-in-ASEAN.pdf

The Securities and Exchange Commission. 2015. SEC-DBD jointly promote “crowdfunding” as an alternative funding option. SEC News Release.

http://www.sec.or.th/en/Pages/News/Detail_News.aspxtg=NEWS&Ig=en&news_no=42&news_yy=2 015

Start to grow. 2016. Ep.-23 What Is Equity Crowdfunding.

https://starttogrow.wordpress.com/2016/08/10/ep-23-%E0%B8%9A%E0%B8%A3%E0%B8%B4%E0%B8%A9%E0%B8%B1%E0%B8%97%E0%B%97%E0%B8%B5%E0%B9%88%E0%B8%A3%E0%B8%B0%E0%B8%94%E0%B8%A1%E%B8%97%E0%B8%B8%E0%B8%99-%E0%B8%95%E0%B9%89%E0%B8%AD%E0%B8%87%E0%B9%80/