Good news for startups - The European Parliament comes to agreement on new crowdfunding rules
The European Parliament (EP) has achieved an agreement with the European Council on new EU-wide rules for crowdfunding.
Its new criteria will apply to all European Crowdfunding Service Providers (ECSP) up to offers of €5m, calculated over a period of 12 months per project owner.
To enable small companies and startups to use the crowdfunding option, the shares of certain private limited liability companies were also included in the scope of the legislation.
There will be additional safeguards and clarifications on how investors should be informed on the consequences of their choices.
Investors will be supplied with key investment information sheet (KIIS) drawn up by the project owner for each crowdfunding offer or at platform level. Crowdfunding service providers will need to give clients clear information about the financial risks and charges which could incurred such as insolvency risks and project selection criteria.
Additionally, investors identified as non-sophisticated will be offers deeper advice around things like their ability to bear losses and a warning in case their investment exceeds either €1,000 or 5% of their net worth.
The parties also decided that a prospective ECSP would need authorisation from their national competent authority (NCA), which will then handle supervision of the platform.
“I am satisfied that we came to an agreement on the final version. I hope that, in a couple of years, investors will see this agreement as a good 2019 Christmas gift”,
said Eugen Jurzyca (ECR, SK), rapporteur for crowdfunding regulation.
Moving forwards, the agreement will need to be approved by the Economic Affairs Committee and the Parliament as a whole.
Source: FinTech Global