EP adopts its position on EU rules on crowdfunding platforms
- Scope of the Regulation extended to include crowdfunding offers up to EUR 8 000 000
- Strict rules on protecting investors
- Vote closes Parliament’s first reading
MEPs adopted their position on common rules to boost European crowdfunding platforms and protect investors on Wednesday.
The proposal 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 crowdfunding services.
Wider scope of regulation
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.
Protecting investors: clear information and transparency
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, 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.
The text, which confirms the position of the Economic and Monetary Affairs Committe, was adopted by 474 votes to 121 with 10 abstentions. The vote closes the Parliament’s first reading in view of an agreement of with EU ministers in the next parliamentary term.
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. 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.