Crowdfunding is a technology-enabled financial service often used by start-up companies or growing businesses as a way of accessing alternative funds. It is an innovative way of sourcing funding for new projects, businesses or ideas. The main types of crowdfunding include, inter alia, peer-to-peer lending, equity crowdfunding and rewards-based crowdfunding.
Despite this important role, European Union (EU) crowdfunding markets for business finance are largely underdeveloped compared to other major economies, and most importantly unable to properly operate cross-border. Hence, the European Commission has put forward, during the first quarter of 2018, a proposal to regulate crowdfunding and peer-to-peer lending in Europe in order to facilitate the cross-border distribution of investment funds and to also broaden access to finance for innovative companies, start-ups and other unlisted firms.
The initiative has two specific objectives. The first objective is to enable platforms to scale cross-border, namely by creating a licensing regime that can be used across the EU without requiring further authorisation in each EU country. The second objective is to ensure that platforms are subject to a framework ensuring proper management of platforms and protection of fund providers, by focusing on sound risk management and on adequate information disclosure.
The initiative introduces provisions on the following main areas:
- Authorisation and supervision of crowdfunding service providers;
- Provision of crowdfunding services and organisational and operational requirements of crowdfunding service providers, and;
- Transparency and marketing communications in relation to the provision of crowdfunding services in the Union.
Our multidisciplinary team can provide comprehensive and holistic solutions tailored to each client’s individual needs, including:
- Regulatory analysis of impact on your business and its operations;
- Licensing management and support;
- Development of an action plan for compliance;
- Provision of answers to relevant queries (Q&A Service);
- Regulatory updates; and
- Determine areas with revenue and other financial impact.
Complyport EU (formerly MAP S.Platis) closely monitors all developments, with our team of seasoned specialists always standing ready to assist clients adapt and prepare for the new and challenging regulatory developments.
For more information, please feel free to contact us.
