WARNING STATEMENT ABOUT CROWDFUNDING
This risk warning statement ("Warning Statement") is prepared by Leet Capital Sdn Bhd (Company No.: 1341808D) ("us", "we" or "our") to inform an investor ("Investor", "you" or "your") in respect of the risks investing in a business / company ("Issuer") hosted on www.leet.capital (our "Website") to raise funds through equity crowdfunding ("ECF").
ECF is a new alternative fundraising method regulated by the Securities Commission (“SC”). Unlike initial public offerings which generally refers to mature and larger companies, companies hosted on Leet Capital are early stage to growth stage companies. Because of this, investments in these companies can be very risky. If an issuer business fails, in the worst case scenario, you may lose your their entire investment.
You are strongly advised to read through the risks listed below before investing in any of the crowdfunding campaigns hosted on our platform. Please be advised that the risks stated below are non-exhaustive list of the risks associated with ECF.
- EQUITY CROWDFUNDING IS RISKY
Issuers using our platform to raise funds are private start-up, early-stage or small or medium sized companies. Investment in these types of businesses is very speculative and carries high risks.
As an investor, it is your responsibility to satisfy yourself on the against the claims or representations made by the issuer.
- HIGH RISK OF LOSING ALL MONEY
You may lose your entire investment or may not be able to recoup your investment, and as such, you must be in a position to bear this risk. We strongly advise you against putting all your investments in ECF campaigns.
If have any doubt as to your financial position and your investment portfolio allocation strategy, we recommend that you engage a certified financial planner approved by the SC to assist you in assessing your financial health before investing in any ECF campaign hosted on our platform.
- PAST PERFORMANCE AND FORECASTS
You are advised to exercise caution and judgment when evaluating any past performance and forecasts made by any issuer hosted on the platform.
Investing in an early stage company is very risky as the the actual performance of the issuers could differ materially from the anticipated performance disclosed by the issuers, and as a result, you may or you may not get back your original investment.
Please take note that startups and early stage companies are usually focused on growth not returns. Although some issuers claim that they may give you dividends, they may or may not be likely to pay out dividends as usually profits, if any, are usually reinvested into the business.
- LACK OF DISCLOSURE OR INFORMATION
Please note that you may not receive all the financial, business or other information about an issuer which may or could be relevant for an investment decision.
While an issuer is required to disclose and provide information based on the disclosure requirements provided by the SC’s guidelines, it may not be possible to verify all the information provided by the issuer according to the standard of other securities offerings under Malaysian law eg an initial public offering.
If you need more information from an issuer, you are strongly encouraged to request for further clarification from the issuer’s management team by directing your questions on the issuer’s discussion page made available on our platform. And if you are of the view that the explanation provided by the issuer is not satisfactory or adequate, you have the discretion not to proceed with the investment decision.
Investing in a private company is highly illiquid.
Before investing, you are strongly advised to consider your financial position by engaging a certified financial planner approved by the SC. Because you are investing in a private company which means that the exit options are limited.
To illustrate, if you want to sell your shares in an issuer you have invested in, there is no public market available for the shares unless you are able to find a willing buyer to buy your shares at an acceptable price.
Alternatively, you may have to wait until any liquidity events occurs like the issuer becomes a public listed company, or when the issuer is acquired by another company.
Please take into consideration that these liquidity events may take a number of years and it will be difficult for you to dispose or sell your shares in the short term eg 2 - 5 years.
- DILUTION RISKS
Take note that your shares entitlement may likely be diluted eg when the issuer raise further funding rounds or when the issuer grants shares to its employees through employee share option schemes.
Generally dilution may not necessarily be a bad thing as the value of your stake may be higher than your initial investment so long as the valuation of the issuer also increases in such funding round. But if that does not happen your stake may get diluted in both percentage and value.
Take note that new shares issued by the issuer may have certain preferential rights to dividends, sales proceeds and other matters in priority of the shares held by you and exercise of those rights may work to your disadvantage.
You are strongly recommended to carry out your own evaluation, or seek independent advice eg engaging a certified financial planner approved by the SC to assess the merits and risk of the investment before investing in any issuer.
We advise that you ask questions, read all information and documents given carefully, and seek independent financial and legal advice before committing yourself to any investment campaign offered on our platform.
Dated 4 January 2020