Amendment 139 of 2023 to Crowdfunding Platform Operator Regulation

Amending instrument that changes the Crowdfunding Platform Operator Regulation (Cabinet Resolution No. 36 of 2022). The CMA has consolidated its changes into the current text of the amended regulation and keeps this instrument in its archive of amending regulations.

Summary

Cabinet Resolution No. (139) of 2023 rewrites the investor-protection and fundraiser obligations of the crowdfunding regime in Cabinet Resolution No. (36) of 2022. It replaces Articles 6 and 7 and paragraph (c) of item 2 of Article 8 of the 2022 resolution, deletes item 5 of Article 3, and takes effect on the day after publication in the Official Gazette.

New Article 6 lists 22 obligations of the platform operator towards investors. Investors other than professional investors and counterparties may invest no more than AED 30,000 per financing applicant and AED 100,000 across the platform in any twelve months. Platform transactions are limited to raising funds to establish a company or increase its capital, with no sale or transfer of partners' stakes through the platform afterwards. Investor money is held in escrow with a bank licensed in the State or a licensed foreign bank until the offer closes, and kept separate from the operator's own accounts. The offer closes once the maximum is reached, and funds are returned within 5 days if the minimum is not met, the applicant defaults or changes materially, the request is cancelled, the maximum is exceeded (the surplus only) or the investor withdraws. Project information must be published at least 14 days before investment opens, with credit information from the Etihad Credit Bureau on the applicant and its board. The operator may not give investment advice, negotiate the financing or advertise it outside the platform, except on its own platforms abroad under CMA conditions.

New Article 7 requires the financing applicant to obtain preliminary approval for the project, disclose its information and an offering period of up to 15 working days (extendable for the same period), use only one platform, keep total financing for itself and its group within AED 15 million over the company's life, pay the operator's fees, and start incorporation or the capital increase within 5 working days of the offer ending. New Article 8(2)(c) lets the applicant re-offer, accept the amount raised or cancel where the offering period expires without the minimum.

Who it applies to

Crowdfunding platform operators licensed by the CMA, companies and founders raising funds through them as financing applicants, and investors, other than professional investors and counterparties, investing through those platforms.

Contents

English official text in 20 articles. Open the full text or jump to a provision:

1. Article 2 — Disclosing to investors their rights to retract their investment decisions and the mechanisms
2. Article 3 — Disclosing the mechanisms available to investors to receive distributions of profits earned on
3. Article 4 — Educating the investor on how to invest through the platform and the type of investment
4. Article 5 — Ensuring that the investments of an investors– except for professional investors or
5. Article 6 — Restricting transactions on the platform to the aggregation of funds for the purpose of
6. Article 7 — Retaining the funds deposited by investors in an escrow account with one of the licensed
7. Article 8 — Segregation of the operator’s bank accounts from bank accounts where investors’ monies are
8. Article 10 — Establishing procedures to ensure the financing applicant’s compliance with their
9. Article 11 — Closing the offering immediately upon reaching the maximum required financing, even if
10. Article 12 — Returning funds to the investor within 5 days in the following circumstances
11. Article 13 — Ensuring that there are no material changes in the financing request, the financing
12. Article 14 — Publishing the business plan, financial feasibility, and economic aspects of the project
13. Article 15 — Publishing information about the financing applicant on the platform and communication
14. Article 16 — Providing credit information about the financing applicant, the chairman, and the board
15. Article 17 — Publishing the applicants’ disclosures on the platform while retaining these disclosures and
16. Article 18 — Immediately disclosing on the platform any errors, misleading information, or investment
17. Article 19 — Promptly disclosing to the investor if the financing applicant decides to settle for the
18. Article 20 — Verifying the absence of any fraudulent activities, deception, or harm to investors by the
19. Article 21 — Rejecting the financing applicant’s offer on the platform or removing their listing from the
20. Article 22 — Refraining from providing investment advice to investors, negotiating financing offered on

Key provisions

Obligations and deadlines

• Operators must cap non-professional investment at AED 30,000 per applicant and AED 100,000 per year.
• Operators must hold investor funds in escrow with a licensed bank until the offer closes.
• Operators must return funds within 5 days in the listed cases.
• Operators must publish project information at least 14 days before investment opens.
• Applicants must not exceed AED 15 million total crowdfunding for the group over the company's life.
• Applicants must begin incorporation or the capital increase within 5 working days of the offer ending.

History and citations

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