The EU’s Economic and Monetary Affairs Committee has changed its position on the creation and functioning of European crowdfunding service providers for business.

A new adopted text aims to help crowdfunding services to function smoothly in the internal market and to foster cross-border business funding in the EU, by providing for a single set of rules on the provision of crowdfunding services.

“Crowdfunding is increasingly an alternative form of finance for start-ups, as well as for small and medium enterprises (SMEs) at an early stage of company growth,” writes the European Parliament. “A crowdfunding service provider operates a digital platform open to the public to facilitate prospective investors or lenders being matched with businesses that seek funding.”

Economic and Monetary Affairs Committee MEPs agreed to extend the scope of the regulation by increasing the maximum threshold for each crowdfunding offer to EUR 8 000 000 (from EUR 1 000 000 – as proposed by the European Commission), calculated over a period of 12 months.

Crowdfunding service providers should give clients clear information about financial risks and charges related to their investment, including insolvency risks and project selection criteria. In addition, Economic and Monetary Affairs MEPs recommend that crowdfunding service providers should disclose the default rates of the projects offered on their platform every year.

Prospective investors should also be provided with a key investment information sheet drawn up by the project owner for each crowdfunding offer.

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by Alex Hamilton
Alex is Senior Reporter at IBS Intelligence, follow him on Twitter or contact him at: alexanderh@ibsintelligence.com
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