The UAE has approved a federal system for crowdfunding platform operators to finance innovative business ideas. The Securities and Commodities Authority will be the regulatory authority for the activity.
Operators from government and private sectors can crowdfund projects, provided they get the necessary permits from the authorities concerned. They have to verify that applicants have a clear work plan.
The system supports the financing of commercial projects, especially small and medium ones.
This came as His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, chaired the last Cabinet meeting at Expo 2020 Dubai.
“Crowdfunding is one of the best ways to finance new, innovative business ideas. It will open a door for the youth and entrepreneurs to finance their ideas,” the UAE Vice-President tweeted on Monday.
Crowdfunding is the practice of raising money from a large number of people to fund a project or business.
The strategy covers all technical aspects associated with the regulation of crowdfunding platform operators. This includes definitions; scope of application; operator licensing requirements; operator obligations towards SCA and investors; financing applicant obligations; and the rights of the investor, the operator, and the financing applicant. The strategy also addresses supervision, inspections, and penalties.
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New law for cooperative societies
Sheikh Mohammed said the UAE Cabinet has also approved a new law for cooperative societies, allowing them to be listed in financial markets. This will help them get strategic partners.
New types of cooperatives have been announced as well. These include digital, financial, professional and others. “Cooperatives are a successful economic model that can be bettered,” said Sheikh Mohammed.