France's second reform of crowdfunding regulation has officially come into force. Resulting from tight cooperation between industry professionals, regulators and government authorities, the new measures expand the scope of both crowdlending and crowdinvesting.
The first French regulation of crowdfunding was issued in October 2014. It was then revised in the spring of 2015. In March 2016, before 500 people gathered for the annual meeting of Financement Participatif France, the French Crowdfunding Association, Emmanuel Macron, then French Minister of Economy, announced a second wave of reforms, a series of measures designed to enlarge the scope of securities and loans that can be offered through crowdfunding. These keenly awaited reforms now become effective with the implementing decree n° 2016-1453 dated October 28, 2016, which was officially published yesterday.
Crowdinvesting
Crowdinvestment platforms registered with the financial markets and securities regulator, the Autorité des marchés financiers (AMF) as Conseil en Investissement Participatif (CIP, equity investment advisor) can now allow projects to seek up to €2.5 million in equity funding while they were limited to €1 million before.
Moreover, crowdinvestment platforms are no longer limited to issuing of simple shares and plain vanilla bonds but may also offer preferred shares, participatory notes and convertible bonds. This will allow them to address a wider audience and meet different needs, such as the needs of cooperatives.
Crowdlending
Crowdlending platforms who have the status of Intermédiaire en Financement Participatif (IFP, crowdlending intermediary) under the supervision of the financial services regulator, APCR, now benefit from higher caps on lender contribution. The limits of €1,000 per investor per project for an interest-bearing loan and €4,000 for an interest-free loan are raised to €2,000 and €5,000, respectively.
Terms of Issuance
Pursuant to Ordinance No. 2016-520 of 28 April 2016 on certificates of deposit, the decree specifies the terms of issuance of the minibons. These new instruments open up the possibility for corporations to directly lend to businesses on crowdfunding platforms. Platforms wishing to trade in minibons must obtain the status of CIP. Companies issuing minibons must show atleast 3 years of financial accounts and funding is capped at €2.5 million per 12 months. The minibons may be purchased by individuals, corporations and specific investment funds.
"The publication of these provisions is great news. We worked hard for their entry into force. While keeping in mind the protection of French investors, they help broaden the scope of crowdfunding platforms and offer broader financing opportunities to SMEs and other businesses. The crowdfunding industry will continue its growth to finance the real economy." Says Nicolas Lesur, President of the French Crowdfunding Association
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