Earlier this week, with no amendments and no proposal to reject the Council’s, the European Parliament approved the new regulatory framework to boost EU crowdfunding platforms and protect investors after a two-year journey. The new rules will start to apply one year after its publication in the Official Journal of the EU, expected in the coming days.
The new single set of rules aim to help crowdfunding services to function smoothly in the internal market and to foster cross-border business funding in the EU, by providing for a single set of rules on crowdfunding services.
In other words, crowdfunding platforms will be able to expand into other European countries so helping the industry grow, a thing which in turn could trigger business creation as a strategy to fuel innovation and new jobs creation.
Crowdfunding Services Providers (ECSP)
The uniform set of criteria will apply to all European Crowdfunding Service Providers (ECSP) up to offers of 5 million Euros (from 1 million Euros proposed by the Commission), calculated over a period of 12 months per project owner.
Protecting investors: clear information and transparency
Investors would be provided with a key investment information sheet (KIIS) drawn up by the project owner for each crowdfunding offer or at platform level. Crowdfunding service providers would need to give clients clear information about the financial risks and charges they may incur, including insolvency risks and project selection criteria.
Authorisation and supervision
A prospective ECSP would need to request authorisation from the national competent authority (NCA) of the member state in which they are established. Through a notification procedure in a member state, ECSP would also be able to provide their services cross-border. Supervision would also be carried out by national competition authorities, with the European Securities and Markets Authority (ESMA) facilitating and coordinating cooperation between member states.