New Set of Rules For Crowdfunding In EU

The European Parliament’s Economic and Monetary Affairs Committee voted on 5 November 2018 to provide a single set of rules on the provision of crowdfunding services.

Thirty-eight votes in favour to 5 with no abstentions allowed to adopt a text to help crowdfunding services to function smoothly in the internal market and to foster cross-border business funding in the EU. But, what’s in it?

1. Threshold

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Entrepreneurs can ask for more money. In fact, Economic and Monetary Affairs Committee MEPs agreed to increase the maximum threshold for each crowdfunding offer to €8 million from €1 million calculated over a period of 12 months, a press release reads.

2. Protecting Investors

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In order to protect investors, crowdfunding platforms should:

  • Give clients clear information about financial risks and charges related to their investment, including insolvency risks and project selection criteria;
  • Disclose the default rates of the projects offered on their platform every year;
  • For each project, provide prospective investors with a key investment information sheet drawn up by the project owner.

3. Conflict of Interests and Complaints

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Crowdfunding platforms will have to:

  • Disclose any investment in any crowdfunding offer on their platforms;
  • Ensure that clients are able to file complaints against them free of charge.

4. National Authorities in Charge

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MEPs agreed that a prospective crowdfunding platforms would need to request authorisation from the national competent authority of the member state in which it is established.

 

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