Crowdfunding Platforms – New Regulation in Europe
New EU rules will allow European crowdfunding platforms to provide new opportunities for start-ups and investors.
The European Parliament recently adopted a new regulation on crowdfunding platform activity. This regulation will apply across the board to all European Union countries. The regulation’s adoption sprang from the desire to create a standardized regulatory scheme for crowdfunding across all European Union countries.
According to the new regulation, it is possible to raise up to only EUR 5 million on a crowdfunding platform.
Additionally, the regulation stipulates rules to protect people investing through a crowdfunding platform, reporting duties for the entities raising funds through those platforms, and wide disclosure of the risks associated with investing.
The regulation also addresses various issues related to the operation of crowdfunding platforms. These include restrictions on outsourcing, the manner in which customer complaints must be resolved, provisions to prevent conflicts of interest, and also protection of investors’ funds.
When will the rules enter into force?
The new regulation is due to be published in the Official Journal of the European Union. It will take effect 12 months after such publication.
Companies operating in the crowdfunding field should be familiar with the new regulation. We, at Barnea, offer knowledge and experience to clients working in this field.
If you require any advice or guidance, we are happy to assist. For more information, please click here.