SEO
Home / News

Crowd Funding Regulations Approved

Securities and Exchange High Council approved the proposed regulations for Crowd Funding that helps financing SMEs and entrepreneurs with innovative ideas.

Securities and Exchange High Council approved the proposed regulations for Crowd Funding that helps financing SMEs and entrepreneurs with innovative ideas. The CEO of Securities and Exchange Organization Shapour Mohammadi explained that the regulation, approved by the High Council on May 14, is in line with the tripartite MoU signed January 13 among Ministries of Finance and Economic Affairs, Labor and Social Affairs, and Communication and Information Technology.

The regulation was drafted with the help of beneficiaries including exchanges and submitted to the By-Law Committee of SEO, which is in charge of setting up multiple sessions to review and make necessary modifications to all rules and regulations prior to submission to SEO’s board. After approval by SEO board, the regulation was approved by the High Council.

The CEO explained that Crowdfunding is a contemporary and popular fundraising method in the world, which is based on the web platforms, where requesting party will use a specific platform to pitch their project or idea to potential contributors. The whole process is supervised and regulated.

In many countries the investors will, in turn, receive certificates that can be transformed in the future e.g. if the company is floated, the investors will receive shares in proportion to their initial investment. This is a suitable exit strategy for investors.

Crowdfunding is applicable for small, innovative and short-term projects like developing mobile apps, designing computer software, restoring and reconstructing buildings, producing movies or any other project that can take the participation form.

Mohammadi underlined that based on the regulations, the requesting party can raise up to 20 billion rials ($4.7 million) by using a licensed platform and issuing electronic certificates, exempted from registration at SEO. The open projects have the ceiling of 200 billion rials ($47 million), which is not allowed for big enterprises and listed companies on Tehran Stock Exchange and Iran Fara Bourse, a decision to make it fully available for SMEs.

The request shall be submitted by or through one of the supervised financial institutions and is decided upon by a working group at IFB. The kind of financial institutions allowed to bring forward the requests will be subsequently announced by the SEO.

The CEO hoped that the move will provide the suitable ground for financing innovating companies.