KUALA LUMPUR: Malaysia is now the first Asean country to have a legal framework on crowdfunding.

Crowdfunding, a practice to raise money from the public to start up a project or venture - usually through the Internet - was one of the amendments passed in the Capital Markets and Services Bill 2015 at Parliament Wednesday.

The Bill, which was passed after two rounds of debates by Senators will protect the interest of crowdfunding investors and companies.

Deputy Finance Minister Datuk Ahmad Maslan said six local companies registered with the Securities Commission have been approved to carry out crowdfunding activities.

"We encourage the use of Equity Crowdfunding and hope that more people will use it.

"The purpose of today's passing of the Bill is to regulate and protect the interest of investors and companies," said Ahmad Maslan at the Parliament lobby.

Under the Bill, private companies with a paid-up capital of not more than RM5mil and with a strong business plan can now fund their ventures through crowdfunding.

The amount of capital collected through crowdfunding is limited to RM5mil, while small and medium enterprises can crowdfund an amount of up to RM3mil in a year.

For investors, the maximum investment amount is limited to RM5,000 for each company and RM50,000 a year for the total amount of crowdfunding investment.

Any fraud committed in crowdfunding activities would fall under Section 179 of the Capital Markets and Services Act which carries a jail term of not more than 10 years and a minimum fine of RM1mil.