Prime Minister Shinzo Abe’s Cabinet approved a draft law revision Friday to promote crowdfunding that would enable startups to raise funds more easily via the Internet, financial services minister Taro Aso said.
A pillar of the revision to the Financial Instruments and Exchange Law is to ease regulations that currently prevent entities other than brokerages from serving as intermediaries in transactions of unlisted stocks.
By diversifying fundraising means for emerging companies struggling to borrow money from banks, Abe’s government aims to encourage their development, believing it will help shore up domestic demand and overcome nearly two decades of deflation.
The legal reform “is necessary to strengthen the provision of risk money and boost the confidence in the Japanese financial market,” Aso, who doubles as the finance minister, said at a press conference Friday.
Under the existing regulations, the brokering in unlisted stocks is limited to securities houses capitalized at ¥50 million or more. But the law revision would permit entities capitalized at ¥10 million or more to engage in crowdfunding.
The mediation of capital investment for startups by forming a fund would also be permitted for entities capitalized at ¥5 million or more, compared with the current threshold of ¥10 million.