Crowdfunding & The Law: Old Wine in New Barrels
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Transcript of Crowdfunding & The Law: Old Wine in New Barrels
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Crowdfunding: Old wine in new bottles?
5 June 2014
Koen Panis (Loyens & Loeff)
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Loyens & Loeff
• Legal and tax advice second to none• Full-service practice• Innovative and pragmatic• Independent with an international scope• 900 lawyers, tax advisors and civil law notaries• 16 offices worldwide
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ProspectusInvestment companies
FSMA
Permits
Unfair competition
Labour laws
IPCopy right
IP infringements
PatentsUnfair terms
Jurisdiction
Corporate structure
Litigation
Tax
Payment Services
Products
Services
Financial instruments
Financial instrumentsServicesProducts
Donation based
Equity based Debt based
Reward based
IP Tax Finance Corporate Labour
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Structuring
One size fits all?
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Who are you?
Project
Access to
Bank lending
Need of
Capital
Product
ExpertiseSize
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Platform
Project
PlatformProject
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Project company BANK
SPV
P P
P
CVBAA1 B1 B2
WATERFALL
C2CROWD
C4C3 C6C5
SH1 SH2 SH3Div Div
100%
10%
Profit participating loan
Distribution Account
C5
100%
Tracking stock
Subordinated loan
Class B shares
P
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EU – Recognition of the potential
27 March 2014: EU Commission notice“Unleashing the potential of Crowdfunding in the European Union”
• Infrastructure: EUR 1,000,000,000 in projects• SME (funding gap)• Part of the process of desintermediation of banks
- Government funds- Pension funds- Bond market- Crowdfunding
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EU - “Way forward”Promotion crowdfunding• Awareness
- Flemish government: promotion (regulation = Federal level)• Co-Investment• Loan guarantees by governments
- State aid/competition rulesTax incentivesEuropean Crowdfunding Stakeholder Forum• Belgian association of crowdfunding (February 2014)
- Industry sector knowledge- Lobby
Study in 2014New report in 2015
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Donation – Reward – Equity – Debt
• Anti-money laundering- Anti-Money Laundering Directive- E-commerce Directive
• Advertising- Misleading and comparative advertising
• Consumer protection - Directive on unfair commercial practices- Unfair Contract Terms Directive
• Intellectual property protection- (EU) Patent
• EU state aid and competition rules
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EU - “key challenge = lack of transparency on the applicable rules”
Donation – Reward – Equity – Debt
• Prospectus Directive• Payment Services Directive• MIFID• CRD IV• AIFM • Consumer Credit • Distance Marketing of Financial Services• Regulations on Capital Requirements• European Venture Capital • European Social Entrepreneurship Funds
National laws
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Belgium
• FSMA notice of 12 July 2012
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FSMA
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Source FSMA - 2012
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FSMA
Source FSMA - 2012
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Belgium
• FSMA notice of 12 July 2012
• No specific regulation for platforms (yet) – existing framework remains
• Programmawet: New Section to Prospectus Law of 16 June 2006
- Limit of EUR 1000 per investor/EUR 300,000 per offer
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Offer Instrument Prospectus Limit/Investor Onsales restrictions
FSMA Advertising rules Distribution monopoly
Issuer Distributor
> 100.000
All investments instruments
Yes No Yes Approval Yes No Yes
< 150 persons
All investments instruments
No No Yes No/review No No No
< EUR 100.000
All investment instruments
No No No No/review No No No
< EUR 5,000,000
Shares in Eligible CVBA
No EUR 5000including continuing
offersNo, but…
Review
Yes
Limits ofEUR 5,000,000
EUR 5,000 to be mentioned
No Yes
< EUR 300.000 Only • Securities• Rest category
• No derivatives• … ! Interpretation !
No EUR 1000 including continuing
offers
No, but… Review Yes
Limits EUR 300,000
EUR 1000 to be mentioned
No No
< EUR 5,000,000
Securities in employee benefit
plans
No No No Review YesLimit
EUR 5,000,000 to be mentioned
No Yes
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Prospectuslaw - New “crowdfunding” exceptions
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