Cabinet rubber stamps regulations for crowd funding and peer-to-peer lending

Cabinet rubber stamps regulations for crowd funding and peer-to-peer lending

Commerce Minister Craig Foss says Cabinet has given the green light to allow crowd funding and peer-to-peer lending as part of a Government overhaul of financial market regulations.

Foss said there'll be no investor caps for equity crowd-funding, aside from the previously announced $2 million cap on what a company can raise via crowd funding annually.

“Crowd funding provides a platform where contributors receive shares in the businesses they invest in, providing a new avenue for early-stage and growth companies to source the risk-capital they need to grow,” Foss said.

"Under the new regulations, offers engaging in equity crowd funding and peer-to-peer lending will no longer need to prepare a prospectus or an investment statement before fund raising from the public."

“This is an exciting development for both start-up businesses and investors," Foss added. "With the regulations coming into force on April 1, New Zealand will lead the Asia-Pacific region is the development of crowd-funding regulation."

Sue Brown, the Financial Markets Authority's head of strategy, innovation and engagement, last year said she expected up to 10 internet based money raisers for businesses to emerge under the laws that come into effect in April.

And Foss told last September New Zealand could become "a bit of a clearing house in this part of the world for such things as crowd funding," attracting overseas investors.

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It's great news for New Zealand entrepreneurs that the government is sticking to the schedule that it was aiming for. Today's news augurs well for the crowdfunding and peer-to-peer industry and I see definite possibilities in New Zealand leapfrogging the US here. If Craig Foss's comments on New Zealand becoming a clearinghouse for initiatives like crowdfunding turns out to be justified, this could mean a huge opportunity for our financial industry.
In my opinion, what we need first though is to educate kiwi entrepreneurs and investors about crowdfunding, which is what Crowdfunding NZ is aiming to do via . It's only once we have a thriving crowdfunding economy in New Zealand that we can look toward lending our expertise to the world.
The one area for concern could be the fact that there is no cap for investors. It is a topic of much debate within our company itself, and frankly the pros and cons for that part of the legislation do balance out currently.