0.1936
900 319 0030
x

07/07/2022 - Economy

iasparliament Logo
July 07, 2022

Equity crowd-funding provides a viable funding channel for start-ups in the country. Do you agree with this view? Comment (200 Words)

Refer - Business Line

Enrich the answer from other sources, if the question demands.

2 comments
Login or Register to Post Comments

IAS Parliament 2 years

KEY POINTS

·        Crowdfunding, , asks the crowd to give funds for specific projects, businesses, social ventures etc.

·        In community crowdfunding, funds are raised for a social or charitable causes and money given here is akin to donations with no expectation of return. Some community crowdfunding platforms give rewards or gifts to donors.

·        SEBI had floated a consultation paper on equity crowdfunding in 2014, but not much progress has been made after that. This could be due to the myraid challenges in opening this route.

·        There is a risk of the platforms being misused by fraudsters to dupe investors in to putting money in to dubious projects.

·        The Companies Act, 2013 which lays down rules for public and private placements of equity shares and the Securities Contracts (Regulation) Act need to be modified to permit businesses to issue equity through these platforms.

·        Financial statements of the issuer should be disclosed on the company website every six months and SEBI should also lay down the networth and other criteria for entities eligible to launch equity crowdfunding platforms.

·        The stocks issued through these campaigns can be listed and traded on the ITP platform. Not only will this provide liquidity to investors in crowdfunding campaigns, the ITP platform can also become an active hub for start-up investing.

 

 

Manish 2 years

Please Review !

IAS Parliament 2 years

Good attempt. Keep Writing.

ARCHIVES

MONTH/YEARWISE - MAINSTORMING

Free UPSC Interview Guidance Programme