crowd-fundingI want to start an equity based crowdfunding platform in Pakistan. Right now the Government has given no statement in favor or against equity based crowdfunding. I am thinking to start an equity based crowd funding website for Pakistani’s from abroad from a country where its legal to do crowdfunding and help my country’s people start their own businesses. Will it be legal to do so?
I think you’re making a mistake in assuming that there are no laws with respect to crowdfunding equity. Just because a government has not made any specific rules using the term “crowdfunding,” does not mean all existing laws regarding issuance and solicitation of securities do not apply. In fact, crowdfunding laws are generally exemptions to stringent financial laws.
If you proceed with this idea, you’ll need to be in compliance with all laws in which the business is based (Pakistan or otherwise), and with all laws in the countries where investors are located, even if those laws don’t specifically mention “crowdfunding.”
I am not an attorney. This is not legal advice.
Forget the term “crowd funding” for a moment and focus on the the fact that you intend enabling individuals to make equity investments.
It’s a pretty safe assumption that there is quite detailed legislation or/and regulation, for which you will need appropriately qualified advice. Looking at existing services in other markets, it also seems probable that you will need both to be registered with a regulatory body, and to have very clearly set out terms and conditions and business practices in order to achieve registration and maintain compliance.
If you start out on this journey, your question will assuredly be resolved along the way. If you’re not ready for, or don’t have the resources to do this, the hypothetical question is not important, and will probably not be answered until someone else commits to developing such a service.
You really do need to be certain there are no regulations on what you propose or you could find yourself in serious legal hot water. It would be very surprising to me if, in this day and age, a government didn’t have some kind of regulations pertaining to crowdfunding or other forms of equity funding.
It’s possible you just aren’t asking the right questions or talking to the correct agencies, but if you continue without ensuring you are not violating any laws then you could create some major headaches for yourself.
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