[author: Alexandra Keenan]
European Parliament’s Economic and Monetary Affairs Committee (“ECON“) published a press release announcing that it has voted to adopt a draft report on the European Commission’s legislative proposal for a Regulation on European crowdfunding service providers (“ECSPs“) (2018/0048 (COD)).
Crowdfunding is an emerging alternative form of financing that connects those who can give, lend or invest money directly with those who need financing for a specific project and is increasingly used as a form of finance for start-ups, as well as for small and medium enterprises (“SMEs“) at an early stage of company growth.
The changes proposed seek to enable crowdfunding platforms to easily provide their services across the EU. Platforms will have to comply with only one set of rules, both when operating in their home market and in other EU countries.
The proposals would also provide more legal certainty for investors as the changes include:
Requiring crowdfunding service providers to disclose the default rates of the projects offered on their platform every year.
Providing prospective investors with a key investment information sheet drawn up by the project owner for each crowdfunding offer.
Crowdfunding platforms will have to ensure that clients are able to file complaints against them free of charge. To do so, they should be provided with a standard template and a record of all complaints received and the measures taken.
The changes are part of the European Commission’s Fintech Action Plan, details of which are available here.