ESMA_QA_816
Topic
Information to clients on topics other than costs and charges
28/01/2022
Subject Matter
Investor protection and marketing communication
Question
In which language should the KIIS, the KIIS at platform level and marketing communications be prepared?
Level 1 Regulation
Regulation 2020/1503 - European crowdfunding service providers for business
ESMA_QA_815
Topic
Information to clients on topics other than costs and charges
10/11/2021
Subject Matter
Investor protection and marketing communication
Question
Article 23, paragraphs 2, 8, 11 and 12 of Regulation (EU) 2020/1503 (hereinafter, 'ECSPR') set out the requirements regarding the preparation of the KIIS, its publication on the crowdfunding platform and the verification that needs to be undertaken to ensure the completeness, correctness and clarity of the information it contains.
We would appreciate if the European Commission could clarify the respective responsibilities of the project owner and the crowdfunding service provider in respect of those requirements, in particular with respect to offers made in more than one Member State.
Level 1 Regulation
Regulation 2020/1503 - European crowdfunding service providers for business
ESMA_QA_814
Topic
Information to clients on topics other than costs and charges
10/11/2021
Subject Matter
Investor protection and marketing communication
Question
Article 21(6), second subparagraph of Regulation (EU) 2020/1503 (hereinafter, 'ECSPR') provides that "prospective non-sophisticated investors and non-sophisticated investors shall not be prevented from investing in crowdfunding projects [...]".
We would appreciate if the European Commission could clarify its interpretation regarding the perimeter of this prohibition set out in Article 21(6), second subparagraph, and notably confirm that this prohibition does not apply to the situation referred to in Article 21(7), notably when a prospective non-sophisticated investor fails to prove to the crowdfunding service provider that she/he understands the investment and its risks.
Level 1 Regulation
Regulation 2020/1503 - European crowdfunding service providers for business
ESMA_QA_813
Topic
Underwriting and placing
10/11/2021
Subject Matter
Provisions of crowdfunding services and organisational and operational requirements
Question
Article 3(3) of Regulation (EU) 2020/1503 (hereinafter, 'ECSPR') provides that "crowdfunding service providers shall not pay or accept any remuneration, discount or non-monetary benefit for routing investors' orders to a particular crowdfunding offer made on their crowdfunding platform or to a particular crowdfunding offer made on a third-party crowdfunding platform".
We would appreciate if the European Commission could clarify its interpretation of the term 'routing of orders' and confirm that, considering the embedded risk of conflicts of interest and the associated serious investor protection concerns associated with such practices, the prohibition set out in Article 3(3) applies broadly to any form of specifically directing prospective investors to a particular crowdfunding offer.
Level 1 Regulation
Regulation 2020/1503 - European crowdfunding service providers for business
ESMA_QA_800
Topic
Information to clients on topics other than costs and charges
10/11/2021
Subject Matter
General provisions
Question
Article 2(1), point (a), of Regulation {EU) 2020/1503 (hereinafter, 'ECSPR') defines a 'crowdfunding service' as "the matching of business funding interests of investors and project owners through the use of a crowdfunding platform and which consists of any of the following activities:
(i) the facilitation of granting of loans;
(ii) the placing without a firm commitment basis, as referred to in Annex I, Section A, point (7), of Directive 2014/65/EU, of transferable securities and admitted instruments for crowdfunding purposes issued by project owners or a special purpose vehicle, and the reception and transmission of client orders, as referred to in point (1) of that Section, in relation to those transferable securities and admitted instruments for crowdfunding purposes.
Article 2(1), point (c), of the ECSPR defines 'individual portfolio management of loans' as "the allocation by the crowdfunding service provider of a pre-determined amount of funds of an investor, which is an original lender, to one or multiple crowdfunding projects on its crowdfunding platform in accordance with an individual mandate given by the investor on a discretionary investor-by-investor basis".
We would appreciate clarification as to the legal nature of the activity of individual portfolio management of loans. We would specifically appreciate if the European Commission could confirm that it should be considered as forming part of the notion of crowdfunding service and, if yes, that it should be regarded as ancillary to the activity of facilitation of granting loans referred to in Article 2(1), point (a )(i).
Level 1 Regulation
Regulation 2020/1503 - European crowdfunding service providers for business