Regulatory

Draft law on crowdfunding

A draft law on crowdfunding for economic undertakings drafted by the Minister of Finance, Funds and Regional Policy has appeared on the website of the Government Legislative Centre. The bill aims to put the institution of crowdfunding, so far subject to general regulations on public offerings, into a legal framework. The draft is intended to harmonise Polish regulations with EU regulations, which, by Regulation 2020/1503 of 7 October 2020, establish common rules for Member States to conduct crowdfunding activities. The new rules are to take effect from 10 November 2021.

Crowdfunding, or crowdfunding, is an increasingly popular form of funding for start-ups and SMEs. It is typically based on a crowdfunding service provider mediating between those seeking funding and potential investors by operating a publicly accessible online platform. Financing a business can, for example, take the form of a loan or the acquisition of securities issued for this purpose.

The indicated draft covers in particular the implementation of the said Regulation 2020/1503 of 7 October 2020 and Directive 2020/1504 of 7 October 2020. The draft regulates in detail the requirements for conducting the business of crowdfunding and the rules of control of entities providing such services.

Under the draft, the Financial Supervision Authority will supervise the activities of crowdfunding service providers. The Commission’s powers will include the ability to stop crowdfunding offers or suspend the activity of providers of such services. In addition, providers will be criminally and civilly liable for the accuracy and reliability of information contained in documentation related to the funding offer. Specific solutions have also been introduced regarding professional secrecy, covering information on the legally protected interests of service recipients obtained in connection with the performance of professional activities by providers.

From the point of view of those applying for funding, the most important provisions of the draft act are those implementing the aforementioned Regulation 2020/1503. Fundraising by a company in an amount not exceeding EUR 1 million, over a period of 12 months, will continue to be subject to the existing regulations. Such collections will not be subject to the obligation to publish an offering prospectus, the intermediation of a crowdfunding platform or an investment company. Offerings between €1 million and €5 million, within a 12-month period, will have to be made available via a platform or an investment firm and will require the preparation of an information memorandum or an investment information key (without the need for approval by the PFSA). On the other hand, offers of EUR 5 million and higher will entail the obligation to draw up a prospectus, its approval by the PFSA and the intermediation of an investment firm.

The proposed changes will also increase the limit of crowdfunding campaigns from €1 million to €5 million. However, the maximum threshold (EUR 5m) is to be reached within two years – from 9 November 2023, while at the beginning it is to be EUR 2.5m. Starting from November this year, it will be possible for companies to raise funds with simplified requirements (no obligation to draw up a prospectus and intermediation of an investment company) only up to an amount lower than EUR 2.5 million if the offer is made available via a crowdfunding platform. In that case, a key investment information sheet will also need to be drawn up.

The bill also provides for specific obligations for companies seeking funding – they will be required to inform the PFSA of their intention to conduct a public offering, as well as of their intention to conduct a public offering campaign.

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