The year 2025 has been nothing short of transformational for Malaysia’s fintech landscape. In February, the Securities Commission (“SC”) officially launched its long-awaited Regulatory Sandbox, followed in June by Bank Negara Malaysia’s launch of the Digital Asset Innovation Hub, and in July by the passing of the Consumer Credit Bill 2025 by the House of Representatives, marking a historic step in strengthening consumer credit protection in Malaysia.
Most recently, on 19 September 2025, the SC also released the long-awaited Guidelines on Social Exchange Platforms (“Guidelines”). This development is absolutely groundbreaking as, for the first time ever, it paves way for the establishment of Malaysia’s first social exchange platform to facilitate fundraising activities for social impact projects through non-profit organisations.
Those familiar with the fintech sector will recognise that this latest development and the establishment of Social Exchange Platforms is hardly accidental, rather, it forms part of a broader narrative that follows the maturity of the capital market and fintech scene in Malaysia. Over the past decade, the SC has steadily introduced new channels through fintech capital raising, from Equity Crowdfunding (ECF) and Peer-to-Peer Financing (P2P) to Initial Exchange Offerings (IEOs), which allow businesses to issue digital tokens to raise capital. Each of these mechanisms has been uniquely designed to support for-profit enterprises in their pursuit of growth and expansion, however, we must also recognise that, for too long, these fundraising channels have been designed almost exclusively with for-profit entities in mind, leaving non-profit organisations and activities largely underserved.
Naturally, as capital markets mature, demand arises for broader and more inclusive fundraising options, and there is a pressing need for regulated social exchange platforms that enable non-profit organisations to also access capital markets to fund social impact projects. Against this backdrop, the SC’s latest release of the Guidelines is both timely and necessary, as with the growing prominence of ESG principles, together with the heightened call for transparency and corporate accountability, the Guidelines fill a critical gap in the market by providing a regulated channel for social impact fundraising activity that is both legitimate and sustainable.
In this article, we highlight the top 10 key takeaways from the Guidelines on Social Exchange Platforms. If you are operating within the fintech ecosystem, whether as a founder, financial institution, social enterprise, or investor, we trust these insights will be particularly beneficial to you.
Key Takeaway 1: What Exactly Is A Social Exchange Platform?
First, it is important to understand what is meant by a “social exchange platform”.
Technically, the Guidelines define it as “an electronic platform operated by a social exchange platform operator that facilitates fundraising by a non-profit organisation in relation to a social impact project”.
Without specifying any particular social exchange platform in Malaysia or elsewhere, one could probably think of one or two similar platforms, typically run through a website or online platform, that facilitate fundraising for social impact projects. Within the Malaysian context, any electronic platform with such a purpose, facilitating fundraising by a non-profit organisation in relation to a social impact project, will now fall within the scope of a social exchange platform.
Key Takeaway 2: Who Can Be A Social Exchange Platform Operator?
The Guidelines make it extremely clear that no person may hold themselves out as an operator of a social exchange platform, or even take, use or adopt, whether directly or by inference, the name, title, or description of “social exchange platform” unless such is registered with the SC.
In other words, those currently operating platforms that resemble or function as social exchange platforms must immediately take steps to regularise their position by registering with the SC. The effect of this provision is to decisively close the door on informal, unregulated, or ambiguous operations, and what once existed in a grey area has now been drawn firmly within a defined regulatory perimeter. This clarity provides assurance not only to donors and participants, but also to the wider ecosystem that social exchange platforms will now operate under a proper regulatory framework.
Key Takeaway 3: What Are The Key Criteria For Registration As A Social Exchange Platform Operator?
The Guidelines set out a clear and exhaustive list of criteria that an applicant must fully satisfy in order to be registered as a social exchange platform operator. It is important to note that the threshold is not met by the mere fact of being an established company, instead, the Guidelines place considerable emphasis on the substance of an applicant’s capabilities and governance, underscoring that only those who meet the highest standards are permitted to operate in this space.
We can certainly understand and appreciate this regulatory approach, as by demanding more than just formal incorporation, the Guidelines ensure that only applicants with the necessary resilience, integrity, and operational strength could operate as a social exchange platform operator. Some of the key criteria include:
• The applicant must be a locally incorporated company with operations in Malaysia;
• The applicant, its directors, controller, and responsible person must be fit and proper;
• The applicant must be able to manage risks associated with its business and operations, including demonstrating processes and contingency arrangements in the event it is unable to carry out its operations;
• The applicant must have sufficient financial, human, and other resources for its operations at all times; and
• The applicant must maintain appropriate security arrangements, proportionate to the scale of its operations and risks, including ensuring a secured operating environment in line with the relevant requirements under the Guidelines on Technology Risk Management.
Key Takeaway 4: What Are The Obligations Of A Social Exchange Platform Operator?
As a social exchange platform operator, the Guidelines set out a rather extensive list of obligations that must be complied with. Ultimately, the social exchange platform operator’s central obligation lies in determining whether to approve a non-profit organisation to raise funds through its platform, and this requires carrying out due diligence and critical assessment on both the non-profit organisation and the proposed social impact project, including:
• Understanding and verifying the operations of the non-profit organisation to ensure it does not engage in practices that are deceitful, oppressive, or improper, whether lawful or not;
• Assessing and verifying that the non-profit organisation meets the eligibility criteria set out in the Guidelines;
• Giving effect and ensuring compliance with applicable AMLA requirements;
• Assessing the viability of the social impact project to be carried out by the non-profit organisations and ensuring sufficiency of disclosures relating to the social impact project.
Key Takeaway 5: What Are The Financial Requirements To Register As A Social Exchange Platform Operator?
To reinforce the seriousness of entry into this space, the Guidelines impose a baseline financial threshold for an entity to register as a social exchange platform operator.
A registered social exchange platform operator must have a minimum:
• Paid-up share capital of RM500,000; and
• Shareholders’ funds of RM500,000 which must be maintained at all times.
Key Takeaway 6: How Does One Register As A Social Exchange Platform Operator?
To register as a social exchange platform operator, the applicant is required to submit all relevant forms and documents to the Securities Commission as specified under the Guidelines.
Prior to making a formal application, the applicant must first consult the SC by providing sufficient information and documents, and where the applicant is regulated by another regulator, a no-objection or approval letter from the relevant regulator must also be submitted alongside the application to the SC.
Given the extent of the registration process, it is advisable for applicants to seek the assistance of a legal professional to navigate and manage the application process effectively.
Key Takeaway 7: Can Any Non-Profit Organisation Raise Funds Through A Social Exchange Platform?
The short answer is no — not every organisation that labels itself as “non-profit” may raise funds through social exchange platforms. The Guidelines rightly impose eligibility requirements on non-profit organisations, and this is both understandable and necessary as after all, when it comes to raising funds from the public, legitimacy, credibility, and transparency must be beyond question.
Fundamentally, there are 2 main eligibility requirements that a non-profit organisation must meet in order to raise funds through a social exchange platform:
1. Incorporation and approval status
The organisation must be locally incorporated as:
• a company limited by guarantee registered under the Companies Act 2016; or
• an entity registered under the Societies Act 1966; or
• an entity registered under the Trustees (Incorporation) Act 1952,
and, crucially, must also be an approved entity registered under subsection 44(6) of the Income Tax Act 1967.
2. Carrying out a social impact project
The organisation must be carrying out a social impact project.
It is worth emphasising that many organisations may loosely or informally declare themselves to be “non-profit”. However, the Guidelines now set out a very clear and proper framework that to raise funds through a social exchange platform, an organisation must strictly meet the prescribed eligibility requirements, and most importantly, it must be a locally incorporated entity that is also an approved entity under subsection 44(6) of the Income Tax Act 1967. In short, not just any self-declared non-profit organisation will qualify to raise fund through a social exchange platform.
Key Takeaway 8: What Types Of Social Impact Projects Qualify For Fundraising Through A Social Exchange Platform?
Only projects that fall within the categories expressly recognised under the Guidelines may qualify for fundraising through a social exchange platform. This ensures that the framework remains focused on initiatives of genuine societal value, rather than being diluted by activities of questionable or peripheral impact.
First and foremost, the Guidelines require that any social impact project must be carried out in Malaysia. Beyond this geographical requirement, the project must also fall within one of three broad categories recognised by the SC, namely:
1. Social welfare;
2. Cultural preservation and heritage; and
3. Environmental sustainability and conservation.
Given the importance of these categories, the full social impact project categories list is extracted below for ease of reference:
1. Social Welfare
• Promoting healthcare and supporting healthcare needs (including mental health) for less privileged and vulnerable communities.
• Eradicating hunger and malnutrition for less privileged and vulnerable communities.
• Promoting education, provision of scholarships, exhibitions, or prizes for individuals in educational, research, or similar work.
• Supporting services for senior citizens who are less privileged and/or in the vulnerable communities.
• Promoting livelihoods of B40, Orang Asli and other vulnerable communities for both rural and urban.
• Promoting religious causes through the construction, improvement, purchase or maintenance of buildings for religious worship in Malaysia, and through the provision or management of related facilities and activities.
• Promoting support for orphans, children, and those from less privileged families and vulnerable communities.
2. Cultural Preservation and Heritage
• Protection of national heritage, art, and culture.
3. Environmental Sustainability and Conservation
• Ensuring and promoting conservation or protection of animals.
• Ensuring and promoting conservation or protection of the environment.
• Disaster management, including relief, rehabilitation, and reconstruction activities.
Key Takeaway 9: Are There Specific Fundraising Conditions For Social Impact Projects?
When it comes to fundraising for social impact projects, one of the perennial concerns is that a substantial portion of the funds raised may be absorbed by operating costs rather than directed to the intended beneficiaries. The Guidelines directly address this issue, introducing safeguards to ensure that funds raised are applied to their intended purpose.
Specifically, a non-profit organisation may only raise funds for a social impact project with a maximum project duration of five years. This prevents indefinite fundraising exercises and ensures that projects remain time-bound and outcome-driven. Most importantly, the Guidelines stipulate that a non-profit organisation must not utilise more than 20% of the funds raised through the social exchange platform to cover operating costs, and these operating costs include, among others, the social exchange platform operator’s fees, legal fees, and the fees for the verification of the social impact report and utilisation of funds report.
In practice, this means that at least 80% of all funds raised must be channelled to the social impact project itself, rather than being diluted by administrative overheads. Such a safeguard is critical in building donor trust and ensuring that contributions achieve the maximum possible impact.
Key Takeaway 10: What Disclosure Requirements Apply To Non-Profit Organisations Raising Funds Through A Social Exchange Platform?
A recurring challenge in traditional fundraising is the lack of transparency, where donors often have limited information, unlike investors in capital market products who are provided with clear disclosures to make informed assessments for their investment. The Guidelines tackle this concern directly by imposing a structured disclosure regime on non-profit organisations seeking to raise funds through a social exchange platform.
Specifically, a non-profit organisation must submit detailed information to the social exchange platform operator for proper disclosure. Among the key relevant information required to be disclosed by the non-profit organisation are:
• The objective or purpose of the fundraising exercise, including detailed information on the social impact project to be carried out by the non-profit organisation;
• Detailed measurable social impact targets which will be achieved in relation to the social impact project;
• Detailed description of the sustainability and scalability of the social impact project;
• Any situations of actual or potential conflict of interest involving the direct and indirect interest of the directors, senior management, key personnel, advisers and patrons of the non-profit organisation and actions taken to address or mitigate them; and
• The targeted amount to be raised, including the amount allocated to fund operation costs of the non-profit organisation, and subsequent use and application of the funds illustrated in a scheduled timeline for drawdown and utilisation of funds.
Importantly, this disclosure information is not only assessed by the social exchange platform operator but must also to be published on the platform itself, thereby ensuring transparency for all potential contributors and donors. This brings social impact fundraising closer to the standards of capital market disclosure by building trust, accountability, and confidence in a sector where credibility is absolutely paramount.
Conclusion
The introduction of the Guidelines on Social Exchange Platforms represents a watershed moment for Malaysia’s fintech and capital markets ecosystem. For the first time, non-profit organisations are provided with a clear, regulated, and transparent channel to raise funds for social impact projects, one that mirrors the standards of accountability long applied to for-profit fundraising.
For fintech players, social enterprises, financial institutions, and investors alike, this development opens new possibilities to participate in capital raising activities that generate not just financial returns, but meaningful and measurable societal impact.
If your organisation requires further insights or legal guidance on Social Exchange Platforms or any fintech-related matters, please feel free to reach out to the firm’s Technology Practice Group. Our lawyers have extensive experience in assisting clients with their legal needs, particularly in navigating compliance and licensing requirements within the fintech market.
Our Technology Practice continues to be recognised by leading legal directories and industry benchmarks. Recent accolades include FinTech Law Firm of the Year at the ALB Malaysia Law Awards (2024 and 2025), Law Firm of the Year for Technology, Media and Telecommunications by the In-House Community, FinTech Law Firm of the Year by the Asia Business Law Journal, a Band 2 ranking for FinTech by Chambers and Partners, and a Tier 3 ranking by Legal 500.
About the authors
Ong Johnson
Partner
Head of Technology Practice Group
Fintech, Personal Data Protection, Technology, Media &
Telecommunications (“TMT”), IP and Competition Law
johnson.ong@hhq.com.my
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Lo Khai Yi
Partner
Co-Head of Technology Practice Group
Technology, Media & Telecommunications (“TMT”), Technology
Acquisition and Outsourcing, Telecommunication Licensing and
Acquisition, Cybersecurity
ky.lo@hhq.com.my.
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