The Government limits the #Crowdfunding

The Ministry of Economy will take advantage of the new Law on Promotion of Corporate Finance in Spain to regulate definitively called  crowdfunding  who starts taking a naturalization as financial intermediation system through internet.  consider today's rules the Cabinet  includes a specific section devoted to setting the legal framework in our country which are known as Participatory Financing Platforms.

These platforms are defined as companies that connect through web pages to a number of investors with developers seeking money for their projects. Participatory financing of these entrepreneurs can be channeled through the issuance or subscription of securities, the issuance or subscription of shares in limited liability companies or direct borrowing. In the first two cases the supervision of   the CNMV shall crowdfunding while the third control responsibility will rest with the Bank of Spain.

Lanuales

The draft bill that is on the table the Government states that the maximum amount of fundraising for each participatory project financing may not exceed EUR 1 million. The new platforms will have a registered capital not less than 50,000 euros or, failing that, to have a liability insurance coverage with an annual 150,000 per year.

Strong financial supervision

The president of the National Securities Market Commission (CNMV), Elvira Rodriguez. (EFE)

Participatory platforms funding must register with the CNMV and Bank of Spain. The application for registration must include a detailed program of activities in addition to the description of the administrative and accounting procedures, and the relationship of significant shareholders and directors, among other requirements. The regulatory authorities may suspend the registration when there are reasonable grounds that the influence of people with significant involvement can damage the sound and prudent management of the platform.

The project promoters shall be validly constituted in Spain. For financing programs through loans, promoters act as individuals must have their fiscal residence in Spain. Loans through new platforms may not incorporate mortgage on the principal residence of the sponsor or promoter partners.

Participatory financing platforms shall be liable to investors for the information provided by the developers and posted on the website. The Ministry of Economy sets limits on the contributions of the projects so that no investor can invest more than $ 3,000 in the same program or over 6,000 euros in several programs over a period of 12 months.

Fines of up to 200,000 euros 

The law also sets Funding for penalties for breach of statutory duty registration, conducting regulated activities and resistance audit conducted by the CNMV and Bank of Spain.

Also considered as breaches breaches of the obligations of information and transparency. Fines range from a minimum of 25,000 euros up to 200,000 euros and can lead to an operating ban within a period of five years.

According to data from 2013, crowdfunding  projects   move about 750 million per year in Europe.  Globally this amount totaled $ 2,700 million , according Infocrowdsourcing. Of these, 13 million, almost ten million euros were allocated to Spain based projects.

Source:  The Confidential

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