Crowdfunding under regulator’s scrutiny
The proposal for a regulation on crowdfunding platforms in the EU is currently subject to a comment procedure. Such platforms allow the public to invest in projects using relatively small amounts of funds, while the final collected sum may amount to tens of millions of Czech crowns. The regulation aims to harmonise rules applicable to crowdfunding service providers across member states.
The proposed regulation introduces an option for crowdfunding platforms to choose whether they will be governed by national legislation or this regulation. If a crowdfunding platform decides to be governed by the regulation, it will be subject to supervision performed by the European Securities and Markets Authority (ESMA) and not by the national bodies.
If the regulation is adopted in the version that has been submitted for comments, it will affect not only crowdfunding service providers that choose to proceed in accordance with the regulation but also persons who disclose their projects intended for funding on these platforms, as these may also be inspected by ESMA to ascertain whether or not these persons’ duties have been violated. The draft regulation also introduces the duty to prepare a document with key information for investors whose concept is similar to the concept of documents prepared in connection with the provision of investment services.
Another novelty is the regulation of advertising of projects published via these platforms. It will no longer be possible to promote specific projects but only the platform as a whole. The proposal also prescribes the rules to settle conflicts of interest that may arise when providing crowdfunding services.
It is no coincidence that a number of proposed rules resemble the existing rules applied within the financial sector, especially the capital market. The European Union does not disguise its attempt to regulate and harmonise this sector, claiming that their intention is to protect the platforms’ investors whose number is in the hundreds and even thousands.