Small businesses to be allowed to raise up to $5 million through this process

The Bahamian authorities are making changes to that country’s securities laws to make crowdfunding much easier, especially for small businesses in need of accessing funds for expansion and development.

Under new rules, which will soon be released by the Securities Commission of The Bahamas, small businesses will soon be able to raise up to $5 million through crowdfunding without much hassle and less bureaucracy.

Senator Kwasi Thompson, minister of state for finance, has disclosed that the Securities Commission in the country is moving to effect this change.

As a result, the Securities Industry Business Capital Rules, 2021 will modernise the rules for small businesses to raise capital, making the process of crowdfunding less costly and less bureaucratic.

Admitting that right now the process is technical, long, cumbersome and really only the bigger businesses tend to do it, Thompson declared that his administration is making it easier for small businesses to be able to participate in crowdfunding.

Process is now being streamlined for small businesses

Speaking in the Senate last week on the debate on the Fiscal Strategy Report, Thompson said the Government was now “streamlining the process so that small businesses would be able to access crowd funding even easier”.

Under the terms of these new proposed rules, Bahamians will be able to raise up to $5 million via crowdfunding.

This will soon be done without having to file a prospectus with the commission. The shares created under this framework would be transferable and can be traded on a secondary market such as the Bahamas International Securities Exchange (BISX), which is the Securities Market in The Bahamas.

“Imagine, if you have small businesses now that can sell their shares on BISX and get other Bahamians to invest in their businesses and be able to trade and sell those shares. It is transformative when it comes to small business development, Thompson told the Senate.

He argued that, for too long, small businesses that wanted to offer shares in their companies to raise capital had their hands tied in bureaucracy.

According to the Government senator, “Not anymore… with crowd sourcing provisions and other modifications to the regulatory regime, the ability for small businesses to raise capital and sell shares will no longer be limited to the proverbial big boys in the corporate world”.

Thompson remarked that his government was bringing the capital markets within reach of Bahamian entrepreneurs and small businesses, noting that protection for small businesses has also been built into the rules.

For example, there will be limitations on the number of shares that an individual outside investor may hold, thus protecting the small business owner from hostile takeovers.