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This regulation pertains to European providers of crowdfunding services for businesses, amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937. Its objective is to ensure financial stability, protect the interests of investors, and prevent risks in the EU financial market.

Furthermore, it establishes a harmonized framework to ensure effective organization, authorization, supervision, and regulation of crowdfunding service companies.

Its primary purpose is to promote cross-border financing for businesses by eliminating obstacles in crowdfunding services. The scope of application includes companies providing these services.

There are three types of actors in this field:

  1. The project promoter
  2. The investors
  3. An intermediary organization in the form of a crowdfunding service provider, bringing together the other two actors on an online platform.

Regarding investors, a distinction is made between inexperienced investors and experienced investors. An experienced investor is one who is aware of the risks associated with investments in capital markets and has sufficient resources to bear these risks without excessive financial consequences (Annex II Regulation 2020/1503 of 7/10/2023). To be considered an experienced investor, certain criteria must be met:

  • Legal entity: must meet at least one of the following requirements:
    • Own funds of at least 100,000.00 euros.
    • Net turnover of at least 2,000,000.00 euros.
    • Balance sheet of at least 1,000,000.00 euros.
  • Natural person: must meet at least two of the following requirements:
    • Gross personal income of at least 60,000.00 euros per fiscal year, or a portfolio of financial instruments exceeding 100,000.00 euros.
    • Have conducted significant operations in capital markets with an average frequency of 10 per quarter over the last four quarters.
    • Work or have worked in the financial sector in a position requiring knowledge of such operations for at least one year, or have held an executive position for at least 12 months in a legal entity specified in point 1.

Inexperienced investors can access the same investments as experienced investors but with a higher level of protection. This includes the obligation to undergo an initial knowledge test and a simulation of the ability to withstand losses, along with a minimum four-day reflection period.

If you need to become a Crowdfunding Service Provider or seek specialized guidance in the financial field, you can turn to experienced professionals such as Navas & Cusí, lawyers specializing in banking and financial law, to obtain the necessary guidance.

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Navas & Cusí Abogados
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