Photo credit; epSos.de on Flickr
Crowdfunding will be much easier in New Zealand as of April 1, paving the way for platforms like Snowball Effect.
Cabinet gave its approval for new crowd funding and peer-to-peer lending regulations Feb. 27 as part of the Financial Markets Conduct Act.
Up until the change companies have needed to issue a prospectus or investment statement before raising money from the public in New Zealand, making it cost prohibitive.
Foss said there would be no investor caps for equity crowd-funding but companies would be limited to raising $2 million a year.
Crowd funding raises money online through a large group of people investing small amounts of money in exchange for a share in that company.
Foss said the law change was an exciting development for both start-up businesses and investors.
“With the regulations coming into force on 1 April, New Zealand will lead the Asia-Pacific region is the development of crowd-funding regulation.”
Simeon Burnett a director of soon-to-launch equity crowd funding provider Snowball Effect welcomed the new rules and said the decision not to cap how much investors can put in was good news.
“We opposed the introduction of investor caps, because we believed that investors would easily be able to circumvent such controls by investing in foreign crowd funding platforms, or investing through entities which do not reveal the ultimate owner.
“We also believe that individuals should be allowed to make their own decisions about their money.”
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