Crowdfunding - new legislation enters into force on 1 February

On 1 February 2017, the Act of 18 December 2016 setting up the framework for the crowdfunding sector will enter into force.

This new legislation aims to further promote the development of alternative financing services (services de financement alternatif / alternatieve-financieringsdiensten) and to ensure a level playing field between the different actors of the sector.

It promotes crowdfunding by granting the special status of “crowdfunding platform” and by establishing new rules for the Belgian crowdfunding market actors.

The Acts’ main characteristics may be summarised as follows.

Scope: The new status applies to persons offering, as part of their regular professional activity,  alternative financing services to Belgian investors.  The new status only cover financial platforms allowing to subscribe to securities (equity or debt) issued by companies while other platforms, such as those collecting donations or offering goods to pay the investors, are not.

Rules of conduct: Alternative financing platforms must comply with several conditions when carrying out their activity and, among others, the following ;

  • Prior accreditation by the FSMA;
  • Supervision of the activity by the FSMA and reporting obligations;
  • Fit and proper requirements for managers and directors of the platform;
  • Compulsory insurance;
  • Compulsory information to provide to clients;
  • Administrative and criminal sanctions in the event of breach of the applicable legal provisions.

Prospectus exemption: The new Act allows for a new prospectus exemption (limited to crowdfunding market actors) more particularly for offers for a total consideration of less than EUR 300,000 with a maximum investment of EUR 5,000 per person, in addition to the current general exemption for offers for a total consideration of less than EUR 300,000 with a maximum investment of EUR 1,000 per person.
Tax advantage: Investments via a crowdfunding platform or a starter fund (fonds starter / startersfonds) benefit from tax advantages (exemption of the withholding tax for loans and tax reduction for capital investments) ; those are the same tax advantages already available as tax shelter in the Programme-Act of 10 August 2015 but which were so far only applicable to direct investments.