Legal Updates

We outline below certain developments which occurred during July 2022 with respect to the implementation of Regulation (EU) 2020/1503 (the “Crowdfunding Regulation”).

Extension to the Transitional Period

On 12 July 2022 the European Commission adopted a delegated regulation (the “Delegated Regulation”) extending the transitional period under the Crowdfunding Regulation by a further 12 months until 10 November 2023. As a result, firms authorised by a Member State to provide crowdfunding services in accordance with national law before 10 November 2022 may continue to provide those crowdfunding services until 10 November 2023.

The Delegated Regulation can be accessed here.

Regulatory and Implementing Technical Standards adopted

On 13 July 2022 the European Commission adopted Level 2 measures under the Crowdfunding Regulation, including nine Regulatory Technical Standards (RTS) and four Implementing Technical Standards (ITS) developed by ESMA and published in its final report from November 2021.

The seven RTS are listed below:

• Delegated Regulation on the conflicts of interest requirements for crowdfunding service providers;
• Delegated Regulation on the methodology for calculating default rates of loans offered on a crowdfunding platform;
• Delegated Regulation on the measures and procedures for crowdfunding service providers' business continuity plans;
• Delegated Regulation on the key investment information sheet;
• Delegated Regulation on the requirements, standard formats and procedures for complaint handling;
• Delegated Regulation on the entry knowledge test and the simulation of the ability to bear loss for prospective non-sophisticated investors;
• Delegated Regulation on the exchange of information between competent authorities in relation to investigation, supervision and enforcement activities;
• Delegated Regulation on individual portfolio management of loans by crowdfunding service providers, specifying the elements of the method to assess credit risk, the information on each individual portfolio to be disclosed to investors, and the policies and procedures required in relation to contingency funds.
• Delegated Regulation specifying requirements and arrangements for the application for authorisation as a crowdfunding service provider.

The four ITS are listed below:

• Implementing Regulation on data standards and formats, templates and procedures for reporting information on projects funded through crowdfunding platforms;
• Implementing Regulation with regard to standard forms, templates and procedures for the co-operation and exchange of information between competent authorities concerning European crowdfunding service providers for business;
• Implementing Regulation with regard to the standard forms, templates and procedures for the notifications of national marketing requirements;
• Implementing Regulation with regard to standard forms, templates and procedures for the cooperation and exchange of information between competent authorities and ESMA in relation to European crowdfunding service providers for business.

The Level 2 measures are subject to scrutiny by the European Parliament and EU Council. Once agreed they will be published in the Official Journal of the European Union.

The European Union (Crowdfunding) (Amendment) Regulations 2022

On 22 July 2022 Minister for Finance, Paschal Donoghue, passed into Irish law the European Union (Crowdfunding) (Amendment) Regulations 2022 (the “Amendment Regulations”). The Amendment Regulations amend Regulations 5 and 6 of the European Union (Crowdfunding) Regulations 2021 (the “Principal Regulations”) to clarify that the responsibility/liability for the information given in a key investment information sheet, attaches to the project owner.

The Amendment Regulations can be accessed here.

Contact us

If you have any queries about the information contained in this article, please contact the Financial Regulation Team or your usual Dillon Eustace contact.

For more information, please see our previous Crowdfunding Regulation Updates:

• Crowd Around – Europe’s New Regime for Crowdfunding, November 2020
• Crowdfunding Update, June 2021
• Crowdfunding Update, December 2021