- Pieter Dierckx - Leo Peeters
- crowdfunding , crowdfunding platforms , FSMA , investment , fund , equity crowdfunding , start-up fund , prospectus
The Law of 18 December 2016 (hereinafter "The Law") regulating the recognition and
definition of crowdfunding and containing various provisions relating to finance finally creates a
legal framework for crowdfunding and alternative types of funding.
Previously, crowdfunding platforms were obliged to comply with a range of legislations, which did not aid clarity and transparency, and meant you couldn’t see the wood for the trees. However, the question is whether the new legislation will create sufficient clarity in this area.
1. The significance and importance of crowdfunding
Crowdfunding can be regarded as a collective effort on the part of several investors who combine
their investments in order to fund a different individual or organisation requiring funds for
Crowdfunding is an alternative form of funding which frequently uses an internet platform as a tool.
It can have various forms, such as equity crowdfunding, credit funding or donation funding.
The Law defines a crowdfunding platform as any natural or legal person who provides or offers alternative funding services in the territory of Belgium, and which is not a regulated enterprise.
And an "alternative funding service" refers to the sale, via a website or via any other electronic device, of investment instruments issued by issuing operators, start-up funds or funding vehicles in the context of a (non-)public offering. And no investment service may be provided in relation to these investment instruments, except:
- the provision of investment advice;
- the receiving and passing-on of orders.
2. A FSMA Permit is necessary
From 1 February 2017, equity crowdfunding platforms are obliged to first obtain a permit from
the FSMA (Financial Services and Markets Authority). To do this, they must submit a dossier.
A number of conditions must be met in order to obtain this permit:
- The activity must be conducted by a commercial company with its central management located in Belgium;
- The directors may only be natural persons;
- The directors must hold the required professional qualities, professional integrity and appropriate expertise; They may not have incurred convictions in the sense of Article 20 of the Law of 25 April 2014 governing the status and supervision of credit institutions;
- The actual management must be entrusted to at least two persons;
- A crowdfunding platform must set up an appropriate organisation which is suited to the nature, scale and complexity of its activities, in order to ensure continuity.
- They must also take out a civil liability insurance policy with a minimum cover, which corresponds to specific conditions laid down by the law.
The FSMA must be notified of any changes to the management or conditions. If a platform ceases
to satisfy the conditions of the permit, it must be terminated.
Crowdfunding platforms may not receive or keep monies in cash or on an account. The same applies to financial products which belong to their clients.
Nor may they hold debts in respect of their clients, or have proxy or power of attorney for a
On its website, the FSMA has a list of the alternative-funding platforms, which may be accessed by the public.
3. Equity crowdfunding in a different EU Member State or by a company located in a different EU Member State
3.1 The FSMA’s approval must also be obtained for extending activities to another country.
The FSMA may oppose such project if it deems that it will to be detrimental to the platform.
3.2 Persons located in other EU Member States can also conduct crowdfunding, provided they satisfy the following conditions:
- Are authorised to provide similar services in their Member State;
- Receive a permit from the FSMA beforehand;
- Meet all of the requirements concerning composition, status and operations, as outlined above.
- Foreign crowdfunding platforms are included under a special heading in the FSMA’s list.
3.3 Persons located outside the EEA who wish to perform crowdfunding activities, must satisfy the following conditions:
- In their state of origin, be subject to a status that permits them to provide similar services;
- Branches which obtain a permit from the FSMA, must be registered under a special heading of the FSMA list;
- The central management for the Belgian activities must be located in Belgium;
If crowdfunding activities are performed by a branch of a crowdfunding platform that is located abroad, only the managers of the Belgian branch must meet the requirements for managers under Belgian legislation.
4. The rules that equity crowdfunding platforms must respect
The Law incorporates a number of rules intended to provide maximum protection for investors.
For instance, crowdfunding platforms have a duty to inform their clients.
They must inform potential investors:
- of the identity and status of the crowdfunding platform itself;
- about the costs of the alternative funding services and about existing legislation;
- of the principal characteristics of the instruments in which it invests.
Clients must be capable of understanding the latter, and must be aware of the risks involved. Therefore, crowdfunding platforms are obliged to verify investors’ knowledge and experience, and to judge the suitability of the instruments.
5. Must a prospectus be published?
In relaxation of "crowdfunding" legislation, the Law introduces an exemption from prospectus, provided the following conditions are met:
- The maximum investment for the offer is 5,000.00 Euros per investor;
- The total value of the offer is less than 300,000.00 Euros;
- All documents concerning the offer mention its total value and the maximum investment per investor.
6. Tax benefits for investments in a crowdfunding platform
From 1 February, people investing in a (FSMA-recognised) crowdfunding platform can benefit from
the tax shelter for start-up enterprises, provided, of course, that they invest in the capital of a
This tax relief depends on the size of the company at the time of fund-raising:
- The tax relief is 30% of the sum invested in SMEs;
- The tax relief is 45% of the sum invested in micro-enterprises.
Tax relief can be gained for the assessment year relating to the income year in which the
investment occurred. The tax relief cannot be refunded or transferred.
Therefore, during its life-time, a company is able to raise a maximum of € 250,000.
The investor may invest a maximum of € 100,000. The maximum stake in the capital that qualifies for the tax concession, is 30%. If the aforementioned 30%-threshold is exceeded, the tax relief is limited to an investment amounting to the first 30%.