On 23 September 2022, ESMA updated its Questions and Answers ("Q&As") in relation to Regulation (EU) 2020/1503 of 7 October 2020 on European crowdfunding service providers for business (“the Crowdfunding Regulation”).
In this latest update, ESMA clarifies in the "general provisions" section of the Q&As:
- that the same internet-based information system can be used on the one hand, for crowdfunding services, and on the other hand, for MiFID II investment services and activities, so long as they are clearly separated in different sections (albeit with the same sign-on authentication);
- that offers to the public of transferable securities made by a project owner in its capacity as offeror pursuant to the exemptions under Article 1(4) points (a) and (b) of EU Prospectus Regulation should not be taken into account when calculating the EUR5.000.000 threshold applicable under Article 1(2) point (c) of the Crowdfunding Regulation;
- while noting that the operation of a non-internet based crowdfunding platform does not constitute a crowdfunding service as defined in point (a) of Article 2(1) of the Crowdfunding Regulation, that a Crowdfunding Service Provider (“CSP”) can engage in other activities including the operation of a non-internet based crowdfunding platform subject to compliance with any other applicable legislation; ESMA flags that the CSP would not be able to benefit from Article 18 of the Crowdfunding Regulation in relation to such non-internet based activity;
- while noting that the offering of a crowdfunding project to a sole investor does not constitute crowdfunding services as defined in point (a) of Article 2(1) of the Crowdfunding Regulation, that a CSP can engage in other activities including the offering of a crowdfunding project to a sole investor subject to compliance with any other applicable legislation;
- that an entity offering its own project to investors on a publicly available internet based information system does not need to be authorised as a CSP (albeit that, depending on the specific features of the project, other legislation may be applicable).
In this latest update to the Q&As, the European Commission has also provided a number of clarifications on various investor protection matters, notably on:-
- the simulation of the ability of non-sophisticated or prospective non-sophisticated investors to bear loss in Article 21(5) of the Crowdfunding Regulation;
- the entry knowledge test under Article 21(7) of the Crowdfunding Regulation; and
- the conflict of interest provision in Article 8(1) of the Crowdfunding Regulation.
