In this snapshot legal update, we report that on 25 May 2022, in a written reply by Mr. Christopher Hui, the Secretary for Financial Services and the Treasury, to Legislative Council questions on crowdfunding, Mr. Hui confirmed that the Hong Kong Government is reviewing the regulation of crowdfunding in Hong Kong.
The objective of the review is to provide clearer regulatory requirements, and to strengthen the transparency and accountability of crowdfunding activities. The review will also focus on methods to prevent fraudulent crowdfunding activities for potentially illegal purposes. The review will include a public consultation to be completed within 2022 to seek feedback on the specific contents of the future regulatory framework, including:
- the scope of crowdfunding activities to be regulated;
- regulatory requirements for different types of crowdfunding activities;
- application, registration, disclosure and account auditing requirements;
- the role of regulatory agencies; and
- enforcement arrangements.
The review will address all four common types of online crowdfunding activities, being:
Equity crowdfunding: Equity crowdfunding is the online offering of shares in a private company to a group of people for investment.
Peer-to-peer lending: Individuals obtain loans directly from other individuals under a platform that allows individuals to source each other and deal directly without a financial institution to intermediate.
Donation-based crowdfunding: Funds are raised for making donations to charitable activities or other causes.
Reward or pre-sale-based crowdfunding: Fundraisers provide goods or services (often while those goods or services are in development) in return for funds provided by contributors.
The full question and response by the Secretary for Financial Services and the Treasury regarding the proposal review and public consultation on crowdfunding is available here.