Table of contents
- Glossary of Definitions and Abbreviations
- Chapter 1. Crowdfunding Regulatory Regime
- Section 1.1 Private companies raising publicly: a new regime for African SMEs
- Section 1.2 Crowdfunding Intermediary: a new regime for African intermediaries
- Section 1.3 Crowdinvestors: a new regime for African individual investors
- Section 1.4 Implementation of the ACfA Label Framework
- Title 1.4.1 Recognition of the SRO by national regulatory authorities
- Title 1.4.2 Cross-border securities-based crowdfunding operations
- Title 1.4.3 Treatment of non securities-based crowdfunding operations
- Chapter 2. Crowdfunding Intermediaries
- Section 2.1 ACfA Label Categories
- Section 2.2 Applications
- Chapter 3. Types of Crowdfunding Operations
- Section 3.1 Crowdfunding Operations permitted only under Category 1
- Section 3.2 Crowdfunding Operations permitted under both Category 1 and Category 2
- Section 3.3 Treatment of offerings not considered as securities
- Chapter 4. Marketing
- Chapter 5. Cross-border Crowdfunding
- Chapter 6. Privacy and Data Protection
- Chapter 7. Anti Money Laundering and Terrorism Financing
- Chapter 8. Supervision, Audits and Enforcement
Crowdfunding intermediaries may market their services through multiple channels (printed press, radio, television, e-mails, adwords, sponsored links, social networks, mobile networks) under the following restrictions:
4.1.1) The Crowdfunding Intermediary informs the audience that they are a registered Crowdfunding Intermediary in possession of the appropriate category of ACfA Label, and displays or mentions their ACfA registration number. Crowdfunding Intermediaries may also display the URL link to ACfA’s public list of registered Crowdfunding Intermediaries: DOC 8-2019: List of Registered Crowdfunding Intermediaries.
4.1.2) The Crowdfunding Intermediary provides meaningful, balanced information on the risks and implications of investing in crowdfunding operations.
4.1.3) Crowdfunding intermediaries which provide equity-based crowdfunding services, and which market equity and equity-like crowdfunding operations, must display the following Risk Warning on their public-facing marketing documents, websites and other publicly available information about their services:
“The purchase of shares in unlisted companies involves the following risks of which all crowdinvestors must be aware before investing. Additionally, you are responsible for diversifying your investment portfolio across several asset classes. We recommend that you consult with your financial planner or advisor on portfolio diversification, and do not invest more than 10% of your savings in project sponsors.
- Risk of loss of capital: The initial amount of capital invested is not guaranteed. This means that if the project sponsor does not succeed in meeting growth targets or is forced to liquidate, your shares can lose some or all of their value.
- Liquidity risk: shares in project sponsors are not immediately liquid. This means that they cannot readily be resold or transferred to another investor, and could be immobilised for several years.
- Valuation risk: the valuation of shares in project sponsors is an estimation based on several factors and is never a precise valuation.
- Risk of dilution of shares: project sponsors are typically in a phase of rapid expansion that might be financed by several rounds of capital raising. This implies that your initial share in the company might be diluted in subsequent rounds as more shares are issued.
4.1.4) Crowdfunding intermediaries which provide crowdfunding services and market crowdfunding operations under ACfA Label Category 2 must display the following Risk Warning on their public-facing marketing documents, websites and other publicly available information about their services:
“Lending carries a risk of not getting paid back on time, and the risk of not getting your money back at all. Make sure that you diversify your investments and only lend money that you can afford to lose.”