The Council of the European Union (“the Council“) has announced that it has adopted new rules to improve the way that crowdfunding platforms operate across the EU.
The new framework is part of the capital markets union project to provide easier access to new financing sources. To that end, it will remove barriers for crowdfunding platforms to provide cross-border services by harmonising certain minimum operating requirements, and will increase legal certainty through introducing common investor protection rules.
The new rules will cover crowdfunding campaigns of up to €50 million over a 12 month period. Any larger operations will be regulated by MiFID and the prospectus regulation.
The rules provide a high level of investor protection, setting out common prudential, information and transparency requirements and including specific requirements for non-sophisticated investors. The rules for EU crowdfunding businesses will also be tailored depending on whether they provide their funding through a loan or an investment.
Further, the framework defines common authorisation and supervision rules for national competent authorities and clarifies that the European Securities and Markets Authority (“ESMA“) will have an enhanced role to facilitate coordination and cooperation.
While the Council has adopted its position at first reading, the regulation now needs to be adopted by the European Parliament at second reading before it can come into force.