Legal Aspects of Crowdfunding

Le crowdfunding – ou financement par la foule – constitue depuis quelques années une source alternative de financement, tant pour les entreprises que les particuliers. Alternative, cette source de financement l’est puisqu’il s’agit de se passer des intermédiaires classiques de financement que sont les établissements de crédit, pour solliciter un financement collectif. Toutefois, la désintermédiation n’est – dans de nombreux pays – qu’une étape transitoire dans le développement d’un régime juridique sui generis adopté dans plusieurs ordres juridiques. Dans ces Etats, un nouveau statut – avec ses obligations corrélatives – est créé. D’autres Etats (majoritaires parmi les 19 rapports nationaux rendus sur ce sujet) n’ont fait qu’adapter des régimes existant, pour y inclure ces nouveaux « acteurs » que sont les sociétés exploitant des plateformes de mise en relation entre financés et financeurs.

Ce rapport général étudie dans un premier temps les différents types de crowdfunding, en fonction des modalités de financement (prêt, don, achat de parts sociales) puis expose les différentes solutions proposées dans 19 ordres juridiques sous l’angle du régime appliqué aux entreprises de financement par la foule puis sous l’angle de la protection « de la foule », c'est-à-dire des personnes – physique ou morales – ayant contribué à un financement sollicité sur une plateforme. Enfin, puisque l’utilisation d’internet est l’outil essentiel dans ce nouveau mode de financement, il se prête plus que tout autre à un développement transfrontière. Le rapport démontre néanmoins que les Etats étudiés sont réticents au déploiement d’une activité en dehors des frontières où se situe l’entreprise de financement, même s’ils sont très souvent loin d’avoir envisagé toutes les difficultés liées à cet aspect.

Crowdfunding has been an alternative source of financing for both businesses and individuals in recent years. It is an alternative source of financing, since it discards the traditional financing intermediaries, such as credit institutions, in order to apply for a financing through the crowd. However, disintermediation is—in many countries—only a transitional stage in the development of a sui generis legal regime adopted in several legal orders. In these States, a new status—with its correlative obligations—is created. Other states (the majority of the 19 national reports on this subject) have merely adapted existing regimes to include these new “actors”, namely companies operating platforms for linking financiers and funders.

This general report first examines the different types of crowdfunding, depending on the financing arrangements (loan, donation, equity) and then sets out the different solutions proposed in the 19 legal systems from the point of view of the regime applied to crowdfunding companies and then from the point of view of the protection of “the crowd”, i.e. the persons—natural or legal—who have contributed to the financing through a platform. Finally, since the use of the Internet is the essential tool in this new form of financing, it lends itself more than any other to cross-border development. The report nevertheless shows that the States here studied are reluctant to let the companies deploy an activity outside the borders where the financing company is located, even if they are very often far from having envisaged all the difficulties linked to this aspect.

There is no specific German legislation or regulation, as at the date of this study, which specifically address and regulate crowdfunding activities. One should nevertheless acknowledge the rapid growth of the crowdfunding market and observe the new forms of legal relationships resulting from fund raising campaigns conducted through the means of internet platforms. This study thus aims to highlight the main legal issues raised by the conduct of crowdfunding activities in Germany by confronting such activities with the legal framework currently in force in Germany.

Le financement alternatif s’est récemment développé en Belgique et les questions juridiques relatives se sont multipliées. L’absence de définition légale du crowdfunding prévalait en Belgique avant l’adoption de la loi du 18 décembre 2016 organisant la reconnaissance et l’encadrement de cette pratique et portant des dispositions diverses en matière de finances. Cette loi organise d’une part un contrôle de cette activité. Ainsi, l’autorité belge de la surveillance des marchés financiers doit vérifier qu’un ensemble de critères d’accès au marché. D’autre part, cette loi crée une série d’incitants fiscaux pour favoriser l’investissement par l’intermédiaire du financement alternatif dans des entreprises qui débutent. Toutefois, si les régimes du droit fiscal et financier sont bien développés, il n’en est rien en ce qui concerne la qualification civile et commerciale des activités de crowdfunding. Il est alors nécessaire d’attendre des développements jurisprudentiels (aujourd’hui inexistants en raison du développement limité de cette activité) pour effectuer cet exercice.

This study sets out to analyse the discipline of the various modalities of crowdfunding used in Brazil. As below, the main difficulty comes from the fact that there are only two specific regulations: one edited in July 2017 which concerns investment-based crowdfunding, and another one edited in October 2017 which regulates donations from natural persons to politicians and political-parties through crowdfunding. That is why, as regards the other types of crowdfunding, it is necessary to search, the sparse legislation—especially in the Civil Code—for rules applicable to the contracts signed between investors, platforms and project developers, which has led to a series of controversies and practical problems.

Au Canada, le financement participatif sous forme de dons ou de « préventes » est le plus répandu, mais il a peu retenu l’attention des juristes et des gouvernements jusqu’à présent. Différentes qualifications doivent être envisagées selon que les contributeurs reçoivent ou non une contrepartie en échange de leur contribution. Une autre distinction s’impose selon que le porteur de projet est le destinataire final des sommes recueillies ou qu’il s’engage plutôt à les verser à d’autres personnes ou à les employer pour la réalisation d’une fin d’utilité privée ou sociale. Plusieurs difficultés découlent de ces qualifications, qui influent tantôt sur la validité des dons, tantôt sur les droits et les obligations des personnes visées. Quant au financement participatif en capital, les autorités canadiennes en valeurs mobilières ont conçu des régimes sur mesure pour en favoriser le développement. Or, ce type de financement participatif connaît un succès mitigé. Le financement participatif sous forme de prêts est peu développé, car tenu en échec par la lourdeur de la règlementation applicable.

Crowdfunding is not regulated in the Cypriot legal system. As a result, business or other entities who wish to initiate crowdfunding activities have to deal with a complex legal framework and are subject to formalities and obligations which have been designed for “mainstream” classic means of attracting funds. This study thus aims to highlight some of the main legal issues raised by the phenomenon of crowdfunding in the Cypriot legal context.

Whilst “financial return crowdfunding” is regulated under Spanish law since 2015, other forms of financing by the crowd, such as donation or reward-based crowdfunding, are not. The conduct of crowdfunding activities in Spain raise nonetheless a wide range of issues which should be acknowledged and addressed. This study therefore aims to highlight the main features of the crowdfunding legal framework and regulation currently in force in Spain.

At the date of this report (July 2018), Estonia has not yet implemented any specific laws or regulations in respect of crowdfunding activities, although there have been initiatives to outline certain rights and obligations of the platform operators. One should though acknowledge the wide range of legal issues raised as a result of the quick development of crowdfunding activities. This study thus endeavours to highlight some of the key legal issues under Estonian law prompted by crowdunding development.

One must at first acknowledge the rapid growth of the crowdfunding market over the recent years, both within the United States and worldwide. With the conduct of diverse crowdfunding activities, various complex legal issues arose. While the laws and regulations in the United States endeavoured to keep pace, at both state and federal levels, with the diversity and evolution of crowdfunding businesses, there is at the date of this report no comprehensive legal framework encompassing crowdfunding as a whole. This report thus aims to shed some light on the existing legal framework in force in the United States and on some of the complex issues raised by crowdfunding activities.

Under Finnish law, crowdfunding platforms are today subject to national regulation, as set out in the 2016 Crowdfunding Act, to the extent that such platforms provide intermediation services to channel funding with financial return. This study thus aims to set out the main characteristics of the Finnish legal framework applicable to crowdfunding in light of the state of the crowdfunding market in Finland.

Le droit français est venu encadrer le phénomène du crowdfunding depuis 2014 avec un régime qui s’est progressivement raffiné et développé. Tant le financement participatif au moyen de prêts à titre gratuit ou onéreux (crowdlending) que le financement participatif au moyen d’instruments financiers (crowdequity), ou encore le financement participatif par des dons (crowd-donating), sont aujourd’hui régulés et soumis à un cadre juridique spécifique. La présente étude vise à mettre en lumière les principales caractéristiques d’un tel cadre juridique national en soulignant certains axes possibles d’approfondissement du régime actuel.

Rather than creating a brand new legal framework specifically applicable to crowdfunding activities, the Greek legislator chose to adapt the existing financial regime through the introduction of some new legal provisions. Whilst considering the increasingly growing crowdfunding phenomenon at the national level, the Greek legislator also sought to keep in sight the current discussions at the Europena level on the regulation of crowdfunding. This study thus aims to sketch out the main characteristics of the Greek legal framework applicable to crowdfunding.

As at the date of this study, besides some noteworthy policy papers, there is no specific legislation or regulation in Ireland specifically addressing crowdfunding. Existing legislation and regulation may nevertheless apply, depending on the business model adopted by crowdfunding platforms. Given the rapid growth of the crowdfunding market, this study thus aims to set out the main legal issues and possible ways crowdfunding activities conducted in Ireland might fall within the scope of existing legislation and regulations.

In Japan, neither comprehensive regulation regarding crowdfunding nor legislation that defines crowdfunding generally exists. Nevertheless, with crowdfunding used more frequently, a rough consensus about the scheme appears to be emerging. Various issues arise nevertheless in respect of the way banking and financial regulation would apply to crowdfunding activities. This study thus aims to sketch out the main characteristics of the japanese legal framework in the context of crowdfunding.

Whilst the Dutch legislator has not (as at the date of this study) formally adopted any specific and comprehensive legislation for the regulation of crowdfunding activities, the Dutch regulator has nevertheless set up conditions and duties (mainly) incumbent to platform operators, to the extent that such crowdfunding activities amount to regulated services such as the provision of investment services or loan intermediation services. This study thus aims to set forth the main characteristics of the Dutch legal framework in the context of the rapidly growing crowdfunding market. The national legislation and regulation will largely be replaced with a unified EU regime by the EU Regulation 2020/1503 of 7 October 2020.

Although there is no specific regulation of crowdfunding in Poland to date, general civil and commercial rules, in particular, would apply to crowdfunding activities. Whilst the crowdfunding market is not as highly developed in Poland in comparison with other national markets in Europe or in the United States, this study aims to set out the main legal rules and issues raised by the crowdfunding phenomenon in the Polish legal context.

Crowdfunding is a rapidly-growing type of financial intermediation requiring regulatory attention. Some countries, such as the United States, have enacted legislation in response to intrinsic challenges in crowdfunding relating to investor protection. Other countries rely on existing regimes governing financial intermediation and adjust them in response to issues arising from the relationship between crowdfunding platforms, investors, and recipients of financing. Singapore, one of the biggest financial markets in Asia, has seen an immense increase in crowdfunding. The country has chosen to adapt its regulatory framework rather than instituting new laws. This report analyses the rules governing debt- and equity-based crowdfunding in Singapore and considers policy proposals concerning Singapore’s regulatory framework.

Crowdfunding has become an important alternative to finance a broad variety of commercial and non-commercial projects in Switzerland. The established forms of crowdfunding include crowddonating, crowdsupporting, crowd pre-financing, crowdlending and crowdinvesting. Although the Swiss crowdfunding market has developed rapidly in the last years, only few specific regulation of crowdfunding exists. For the most part crowdfunding must therefore be embedded into the non-specialized regulatory environment, which raises various issues. The Swiss government has recognized the respective problems, including the resulting potential losses in terms of innovation and economic growth. This resulted in several recent amendments of the regulatory framework, in particular regarding crowdlending. This contribution provides a brief overview of the Swiss crowdfunding market and the regulatory environment with status as of July 2019. For the latest developments see Troxler (Crowdfunding und Vertrauensschutz - Grundlagen und rechtsvergleichende Betrachtungen. In: Blaurock, Maultzsch (eds.) Vertrauensschutz im digitalen Zeitalter. Nomos, Baden-Baden, pp 73–140, 2020a), Troxler (Crowdfunding and the Protection of Trust - Fundamentals and Comparative Law Considerations. University of Oxford. Oxford Business Law Blog. https://​www.​law.​ox.​ac.​uk/​business-law-blog/​blog/​2020/​07/​crowdfunding-and-protection-trust-fundamentals-and-comparative-law, 2020b) and Troxler (Crowdfunding in der Schweiz - Eine kritische Würdigung der regulatorischen Rahmenbedingungen, Jusletter, 2021).

Under Taiwanese law, as at the date of this report, only equity crowdfunding is regulated and subject to regulatory supervision and control. This is not to say however that the conduct of other types of crowdfunding activities, such as reward-based or donation-based crowdfunding may not fall within the scope of civil, commercial or consumer law in some instances. Crowdlending in particular may fall, upon the specific business model features at hand, within the scope of banking regulation. This study therefore aims to highlight the main characteristics of the current legal framework applicable to crowdfunding activities in Taiwan.