MSMEs urged to tap capital market in Philippines

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The Securities and Exchange Commission (SEC) is urging micro, small and medium enterprises (MSMEs) to raise funds from the capital market.

SEC chairperson Emilio Aquino said the COVID-19 pandemic has caused many financial problems for a lot of MSMEs around the country.

'We at the SEC hope to stem their financial woes by providing possible solutions to these enterprises, particularly through the capital market and crowdfunding,' Aquino said.

The SEC said MSMEs can tap the capital market, including crowdfunding platforms, to raise funds for business expansion.

Crowdfunding is a type of fundraising activity typically conducted by start-ups and SMEs, where the public can support or fund a business idea through an online platform.

Crowdfunding activities in the country are regulated by the SEC through the rules and regulations governing crowdfunding provided under SEC Memorandum Circular No. 14, Series of 2019.

Under the crowdfunding rules, 'SMEs no longer have to register securities with or secure approval directly from the SEC before they can solicit investments from the public.'

Furthermore, SMEs need only to conduct their fundraising activity with a crowdfunding intermediary, funding portal or crowdfunding platform registered with the SEC.

Within a 12-month period, an SME may raise as much as P10 million when its securities are offered and sold to any investor, and up to P50 million when offered and sold to qualified investors.

There are currently three crowdfunding intermediaries registered with the SEC, namely Investree Philippines, SeedIn Technology Inc. and Eastern Securities Development Corporation (Round One).

The SEC will kick off a roadshow on capital market formation for MSMEs and start-ups at the Pinnacle Hotel in Davao City today, Feb. 15.