The EU legislative bodies have announced that political agreement has been reached on the proposed Regulation on European Crowdfunding Service Providers for Business. The proposed ECSP Regulation is part of the EU Capital Markets Union initiative and the Commission's FinTech Action Plan. It aims to increase access to finance through crowdfunding for innovative companies, start-ups and SMEs. The European Commission published the original legislative proposal on March 8, 2018. Since then, the text of the proposed ECSP Regulation has been amended.
Under the proposed ECSP Regulation EU CSPs would be authorized and supervised by national authorities in the member state in which they are established and would be able to passport their services across the EU. The Commission had proposed that ECSPs be authorized and supervised by the European Securities and Markets Authority.
ECSPs in scope of the proposed ECSP Regulation are those with offers up to €5 million (up from the €1 million proposed by the Commission), calculated over a 12-month period per project owner. Larger operations will be subject to new rules to be added to the EU Markets in Financial Instruments Directive, as amended.
To ensure investor protection, each investor will be provided with a key investment information sheet (KIIS) prepared by the project owner. The KIIS will be required for each crowdfunding offer or at platform level. More detailed and onerous investor protection requirements must be met for unsophisticated investors.
The proposed ECSP Regulation is subject to final technical amendments and following adoption by the European Parliament and the Council of the European Union, will be published in the Official Journal of the European Union. As a regulation, the ECSP Regulation will apply directly across the EU once it enters into force.