Equity Crowdfunding (ECF)
- Fundraising with Equity
- ECF 101
- Who can raise
- Shariah Compliant ECF
- Incentives for ECF Issuers
- What is the process?
- Building Your Campaign Page
- Legal Documents for ECF
- Company Valuation
- Campaign Marketing and Promotion
- Planning Your Investor Strategy
- Marketing Do's and Dont's
- Crowd-Funded Venture Capital
- Type of shares
- Fee structure
- Nominee Structure
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Shariah Compliant ECF
The Shariah compliant ECF fundraising exercise goes through the same process except for three key differences. Firstly, the issuer has to go through a shariah compliant ECF briefing. It is to ensure that the issuer is aware of the commitments that entail from exercising this undertaking.
Secondly, the issuer has to undergo a shariah screening process. It is mandatory for issuers who are interested in doing a shariah compliant ECF fundraising exercise. The screening will focus on two levels of screening, which are business or activity screening and financial ratio screening. It is to ensure that the issuer complies with the requirements laid out in the SC’s Shariah Screening Assessment Toolkit for Unlisted Micro, Small and Medium Entreprises (Toolkit).
Last but not least, issuers also must ensure that the relevant legal documentations are aligned with the ECF platform’s shariah compliance requirements. They will be reviewed prior to commencement of the fundraising campaign. Only those who meet the eligibility criteria will be allowed to list their campaigns as being shariah compliant.
Differences between Conventional Equity Crowdfunding (ECF) and Shariah-Compliant Equity Crowdfunding (ECF)
| Conventional ECF | Shariah-Compliant ECF |
|---|---|
| Wider range of businesses and industries | Businesses that align with Islamic finance principles, ensuring ethical and responsible investments. |
| Operates under conventional finance practices | Adheres to Islamic finance principles, such as profit and loss sharing, and prohibits interest-based transactions |
| May have a larger pool of potential investors due to the broader range of investment opportunities | Anyone can invest! Particularly attractive to investors that are seeking Shariah-compliant or responsible investments. |
| Does not require a Shariah advisory board or compliance with Islamic finance principles | Requires a Shariah advisory board to ensure compliance with Islamic finance principles. |