Crowdfunders - be alarmed!

• Netherlands

• Banking and finance

06-05-2013

The Netherlands Authority for the Financial Markets (AFM) and the Dutch Central Bank (DCB) published a crowdfunding step plan on 1 May 2013. The step plan leads you through the several do’s and don’ts of crowdfunding from a Dutch regulatory perspective.

Crowdfunding, an alternative form of financing, is not specifically dealt with in the Dutch Financial Supervision Act (FSA). Depending on the structure of a crowdfunding initiative however, the parties involved (investors, the platform and the recipient of the funds) may be confronted with license obligations and regulatory prohibitions as laid down in the FSA. We note that the step plan of the Dutch regulators mainly focuses on the regulatory regime which may potentially be applicable to the crowdfunding platform, rather than, also, dealing with the other parties involved.

The step plan of the Dutch regulators provides an overview of potential hiccups, in line with what we already identified in our newsletter ‘The “10 Commandments” of crowdfunding’.

The steps identified by the AFM and DCB can be summarised in the following three main questions. A positive answer to any of these questions results in Dutch regulatory provisions to be applicable to the crowdfunding platform.

1.  Financing through loans?
2. Loans to consumers / private persons?
3. Financing through securities?

The AFM and DCB emphasize that they view the activities of the crowdfunding platform as being aimed at creating a successful alternative manner of financing. As such, the business model of crowdfunding platforms results, in their view, in the Dutch regulatory regime to be applicable, almost as a given. As such, it seems there are less ways to prevent the (heavy) burden of obtaining dispensation for financial intermediary activities or to avert the applicability of regulatory obligations and prohibitions.

We expect the Dutch regulators to pay more and more attention to crowdfunding initiatives. Therefore: crowdfunders, be alarmed.

The Banking & Finance team of Eversheds Faasen can advise you on the Dutch regulatory aspects of your crowdfunding initiatives and help you strategically structure your ideas.