INFORMATION TECHNOLOGY
European Union: new rules enacted for the crowdfunding platforms.
The EU Parliament has definitively approved the agreement reached with the Council on EU rules to promote crowdfunding platforms and protect investors.
Crowdfunding is increasingly popular as an alternative financing tool for start-ups as well as for small and medium-sized enterprises (SMEs) at an early stage of business growth. A crowdfunding service provider operates a digital platform open to the public to help potential investors or lenders find projects and businesses looking for funding.
The new rules aim to help crowdfunding services operate smoothly in the internal market and to promote cross-border business financing in the EU. The set of criteria will apply to all European crowdfunding service providers (ECSPs) up to offers of EUR 5 million (instead of the million euro proposed by the Commission), calculated over a period of 12 months for each owner of the project under funding.
Investor protection: clear information and transparency
The new law requires an investment information sheet (KIIS), drawn up by the project owner, to be distributed to all investors and lenders participating in each crowdfunding offer or platform. Crowdfunding service providers will provide customers with clear information about the risks and financial burdens they may incur, including insolvency risks and project selection criteria.
Authorization and supervision
Each ECSP must seek authorisation from the competent national authority (NB) of the Member State in which it is established. Through a notification procedure in a Member State, the ECSP will then be able to provide its services across borders as well. Supervision will also be carried out by national competition authorities, while the European Financial Instruments and Markets Authority (ESMA) will coordinate cooperation between EU countries.
Next steps
The rules will begin to apply one year after publication in the Official Journal of the EU.
Crowdfunding is increasingly popular as an alternative financing tool for start-ups as well as for small and medium-sized enterprises (SMEs) at an early stage of business growth. A crowdfunding service provider operates a digital platform open to the public to help potential investors or lenders find projects and businesses looking for funding.
The new rules aim to help crowdfunding services operate smoothly in the internal market and to promote cross-border business financing in the EU. The set of criteria will apply to all European crowdfunding service providers (ECSPs) up to offers of EUR 5 million (instead of the million euro proposed by the Commission), calculated over a period of 12 months for each owner of the project under funding.
Investor protection: clear information and transparency
The new law requires an investment information sheet (KIIS), drawn up by the project owner, to be distributed to all investors and lenders participating in each crowdfunding offer or platform. Crowdfunding service providers will provide customers with clear information about the risks and financial burdens they may incur, including insolvency risks and project selection criteria.
Authorization and supervision
Each ECSP must seek authorisation from the competent national authority (NB) of the Member State in which it is established. Through a notification procedure in a Member State, the ECSP will then be able to provide its services across borders as well. Supervision will also be carried out by national competition authorities, while the European Financial Instruments and Markets Authority (ESMA) will coordinate cooperation between EU countries.
Next steps
The rules will begin to apply one year after publication in the Official Journal of the EU.
