What are the Legal and transactional implications of equity crowdfunding? Koen Panis presents the legal scenario in Belgium and EU.
By Koen Panis, Loyens & Loeff. Presented at Crowdsourcing Week Brussels 2014. More info: http://crowdsourcingweek.com/
2. 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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3. 3
Prospectus
Investment companies
FSMA
Permits
Unfair competition
Labour laws
IP
Copy 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
6. 6
Project company BANK
SPV
P P
P
CVBA
A1 B1 B2
WATERFALL
C2
CROWD
C4C3 C6C5
SH1 SH2 SH3
Div Div
100%
10%
Profit participating loan
Distribution
Account
C5
100%
Tracking stock
Subordinated loan
Class B shares
P
7. 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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8. EU - “Way forward”
Promotion crowdfunding
• Awareness
- Flemish government: promotion (regulation = Federal level)
• Co-Investment
• Loan guarantees by governments
- State aid/competition rules
Tax incentives
European Crowdfunding Stakeholder Forum
• Belgian association of crowdfunding (February 2014)
- Industry sector knowledge
- Lobby
Study in 2014
New report in 2015
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9. 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
13. 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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14. 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 5000
including continuing offers No, but…
Review Yes
Limits of
EUR 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 Yes
Limit
EUR 5,000,000
to be mentioned
No Yes
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Prospectuslaw - New “crowdfunding” exceptions