Background
On 27 March 2019, the European Parliament adopted a legislative resolution on the proposal for a regulation on European Crowdfunding Service Providers ("ECSP"). Until now, the European Parliament negotiating team and the Council still had some points of discussion. An agreement has finally been found.
Cap
Whereas the Economic and Monetary Affairs Committee wanted to expand the scope of the ECSP by increasing the maximum threshold for each crowdfunding offer to EUR 8,000,000 (an eightfold increase from the level of EUR 1,000,000 proposed by the European Commission), to be calculated over a period of 12 months, it has been agreed that the single set of rules stated in the proposed ECSP regulation will apply to all ECSP up to offers of EUR 5,000,000 calculated over a period of 12 months per project owner.
Extended scope of application to small companies and start-ups
It has been decided to enable small companies or start-ups to use the crowdfunding option. Therefore, the shares of certain private limited liability companies, which are freely transferable on the capital markets, have been included in the scope of the proposed regulation.
Investor Protection
In addition to the key investment information sheet ("KIIS") to be provided to investors for each crowdfunding offer and containing, inter alia, information about the financial risks and charges related to their investment, investors identified as non-sophisticated would be offered more in-depth advice and guidance, including on their ability to bear losses and a warning in case their investment exceeds either EUR 1,000 or five per cent of their net worth, followed by a reflection period of four calendar days.
Authorisation and supervision
Prospective ECSP would need to request authorisation from the national competent authority of the Member State in which they are established and will also be able, through a notification procedure in the host Member State, to provide their services on a cross-border basis. The national competent authority and ESMA will ensure cooperation between Member States.
The text will now have to be approved by the Economic Affairs Committee and the Parliament as a whole.
ESMA’s press release is available here.
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