ABSTRACT

Equity crowdfunding (“ECF”) is one of the alternative financing mechanisms to the

traditional fundraising method for most of the new ventures, start-up entrepreneurs and Small
Medium Entrepreneurs (“SME”) nowadays. Apart from analysing the concept of ECF in the
current market, this research highlighting some of the potential legal challenges for example
risk of loss, intellectual property risk and money laundering etc faced by the investors, issuers
and platform operators respectively in ECF activity. Therefore, an optimal regulation is
required to regulate and overcome these legal challenges. This research also sets out the
recent regulatory developments in ECF in Malaysia and focuses on how the regulations and
guidelines issued by Securities Commission Malaysia to balance the support for ECF
conducted by issuers and at the same time to enhance the protection against the retail
investors. It is the argument that the current regulations of ECF in Malaysia do not provide an
optimal legal and regulatory framework to regulate and govern ECF due to the fact that
Malaysia Parliament does not enact a particular law or Act to specifically govern ECF
activities and transactions in Malaysia. In this regard, reference is made to the regulatory
frameworks adopted in other jurisdictions such as United States and United Kingdom. This is
done by offering some observations on the similarities and differences keys features of ECF
regulation in Malaysia and other jurisdictions. This research recommends for issuer in
Malaysia which requires small amount of funds to be exempted on the disclosure
requirements and to provide tax incentive for retail investors in order to encourage public to
utilize ECF.

Keywords: Equity Crowdfunding, Issuer, Investor, Platform Operator, Legal Challenges,

Regulatory