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Response to EC crowdfunding consultation Dec 2013
Response to EC crowdfunding consultation Dec 2013
Response to EC crowdfunding consultation Dec 2013
Response to EC crowdfunding consultation Dec 2013
Response to EC crowdfunding consultation Dec 2013
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Response to EC crowdfunding consultation Dec 2013

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Response to the European Commission's crowdfunding consultation, previously discussed here: http://sdj-thefineprint.blogspot.co.uk/2013/10/crowdfunding-brussels-sprouts.html

Response to the European Commission's crowdfunding consultation, previously discussed here: http://sdj-thefineprint.blogspot.co.uk/2013/10/crowdfunding-brussels-sprouts.html

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  • 1. Crowdfunding in the EU Identification First name Simon  -open reply-(compulsory) Family name -open reply-(compulsory) Deane-Johns  What category describes you best? Association / interest representative -single choice reply-(compulsory)   Organisation's name -open reply-(compulsory) Keystone Law  Transparency register ID number (If you do not   indicate your ID, your response will count as an individual contribution) -open reply-(optional) Country (of residence or establishment) -single United Kingdom choice reply-(compulsory)   Do you agree to publishing your replies on the Yes European Commission's website? -single choice   reply-(compulsory) Definition and models of crowdfunding WHAT IS CROWDFUNDING? open call to the public - through the internet - to collect funds - Which elements should always be present in a during a specified time period - for a specific project - in the form crowdfunding campaign? -multiple choices reply- of small contributions - from a large number of individuals - other (optional) elements   Which (further) elements should define Please see the attached response to the UK Financial Conduct Authority's recent crowdfunding? -open reply-(compulsory) consultation on regulating peer-to-peer lending and crowd-investing  Should crowdfunding be reserved to projects No with smaller financing needs? -single choice reply-   (optional) CATEGORIES donations - rewards - lending - debt (bonds) - equity (shares) - Crowdfunding can take many forms, hybrid models - other models / comments - * I think some of the depending on what contributors get in return for their money. Which of these models are you familiar with? above categories should be treated as one   -multiple choices reply-(optional) What categorisation would you propose? What Please see the attached response to the UK Financial Conduct Authority's recent comments would you like to make? -open reply- consultation on regulating peer-to-peer lending and crowd-investing  (compulsory) Which models should be treated as one category and why? -open reply-(optional) Please see the attached response to the UK Financial Conduct Authority's recent consultation on regulating peer-to-peer lending and crowd-investing  Other than donations, there is also lending- or yes investment-based crowdfunding with social  
  • 2. objectives. Should these be treated differently than any other lending or investment campaign for profits? -single choice reply-(optional) Benefits of crowdfunding Growth & jobs -single choice reply-(optional) high   Entrepreneurs & SMEs -single choice reply-(optional) high   Social entrepreneurs -single choice reply-(optional) high   Innovation -single choice reply-(optional) high   Research and development (R&D) -single choice high reply-(optional)   Small retail investors high -single choice reply-(optional)   ARE THERE OTHER BENEFITS FROM Please see the attached response to the UK Financial Conduct Authority's recent CROWDFUNDING? -open reply-(optional) consultation on regulating peer-to-peer lending and crowd-investing, especially Annex 1  WHAT SPECIFIC ADVANTAGES DO Please see the attached response to the UK Financial Conduct Authority's recent FINANCIAL FORMS OF CROWDFUNDING consultation on regulating peer-to-peer lending and crowd-investing, especially HAVE? (PROFIT-SHARING, LENDING, Annex 1  EQUITY AND DEBT) If earlier you suggested different categories, please describe the advantages of those. -open reply-(optional) FRAUD - project owner or platform does not use Acceptable   the money for the stated purpose -single choice reply-(optional) PROJECT FAILURE - project owner tries his Acceptable best, but the project fails and does not deliver   what was promised to crowdfunders -single choice reply-(optional) MISLEADING ADVERTISING - project is Acceptable presented as all rosy, and people   contribute without knowing the risks they take -single choice reply-(optional) CONTRIBUTORS DO NOT GET BACK THE Acceptable MONEY they could reclaim in case of an   unsuccessful campaign -single choice reply-(optional) ARE THERE OTHER RISKS IN THE DONATION, The platform operator does not segregate customer funds and becomes insolvent REWARD OR PRE-SALE MODELS OF or otherwise dissipates the money   CROWDFUNDING? -open reply-(optional) Could a scandal undermine contributors' confidence? yes -single choice reply-(optional)  
  • 3. Investors overvalue the project (pay more for Acceptable the shares than what they are worth) -single choice   reply-(optional) Project fails and investors lose the capital they Acceptable invested   -single choice reply-(optional) Investors are not able to exercise shareholder Acceptable rights -single choice reply-(optional)   The company issues new equity and dilutes the Acceptable   investment value of first round investors -single choice reply-(optional) Lack of exit options (investors are not able to Acceptable sell-on the equity) -single choice reply-(optional)   Investment not being profitable (even if the Acceptable project does not fail, it may not be able to pay   dividends) -single choice reply-(optional) Complexity -single choice reply-(optional) Acceptable   Lenders do not know the credit-risk of the Acceptable borrower -single choice reply-(optional)   Project fails and lenders do not get back the Acceptable money they lent -single choice reply-(optional)   Lenders do not receive the promised interests Acceptable -single choice reply-(optional)   Complexity -single choice reply-(optional) Acceptable   DO YOU SEE OTHER RISKS IN FINANCIAL   FORMS OF CROWDFUNDING (profit-sharing, lending, securities)? -open reply-(optional) Identifying the role of the EU Raising awareness profit sharing - lending - equity/debt (shares/bonds) -multiple choices reply-(optional)   Combining public funding and crowdfunding profit sharing - lending - equity/debt (shares/bonds) -multiple choices reply-(optional)   Coordinating self-regulation donations - rewards - pre-sales - profit sharing - lending - -multiple choices reply-(optional) equity/debt (shares/bonds)   Sharing national experiences & regulatory donations - rewards - pre-sales - profit sharing - lending - best-practices -multiple choices reply-(optional) equity/debt (shares/bonds)   Providing easier market access to all EU profit sharing - lending - equity/debt (shares/bonds) countries -multiple choices reply-(optional)   Protecting contributors from risks profit sharing - lending - equity/debt (shares/bonds)
  • 4. -multiple choices reply-(optional)   Do you have in mind other areas of action for Proportionate EU-wide regulation of peer-to-peer lending and crowd-investing in the EU that would help reap the benefits of line with payment services and e-money regulation. Please see the attached crowdfunding? -open reply-(optional) response to the UK Financial Conduct Authority's recent consultation on regulating peer-to-peer lending and crowd-investing, especially Annex 2  What do you think of EU law on financial services as It is not well suited to crowdfunding; a new, tailor-made legal applied to crowdfunding today? framework is needed -single choice reply-(optional)   A European legal framework for financial forms other of crowdfunding should be -single choice reply-   (optional) Please specify what other design would be Proportionate EU-wide regulation of peer-to-peer lending and crowd-investing in optimal for an EU framework (you can elaborate line with payment services and e-money regulation. Please see the attached on the specific rules later) -open reply-(optional) response to the UK Financial Conduct Authority's recent consultation on regulating peer-to-peer  to inform contributors of investment risk or credit Yes, for lending - Yes, for equity / debt   risk -multiple choices reply-(optional) to assess the profile of the investor -multiple Yes, for lending - Yes, for equity / debt choices reply-(optional)   to perform due diligence / credit risk assessment Yes, for lending - Yes, for equity / debt   of projects -multiple choices reply-(optional) to monitor the performance of the projects after   a successful campaign -multiple choices reply(optional) to act as nominee shareholder or contributors' Yes, for lending - Yes, for equity / debt representative in legal proceedings related to a   project -multiple choices reply-(optional) to manage conflicts of interest within the Yes, for lending - Yes, for equity / debt platform -multiple choices reply-(optional)   to cover eventual losses to contributors through   compensation scheme or insurance -multiple choices reply-(optional) What other duties should financial crowdfunding Proportionate EU-wide regulation of peer-to-peer lending and crowd-investing in platforms have? -open reply-(optional) line with payment services and e-money regulation. Please see the attached response to the UK Financial Conduct Authority's recent consultation on regulating peer-to-peer lending and crowd-investing, especially Annex 2  Should contributors be advised to diversify their yes investments into crowdfunding? -single choice reply-   (optional) Should there be a minimum or a maximum Maximum amount set for individual contributions? -single   choice reply-(optional) What maximum amount for which crowdfunding There should only be a maximum limit of, say, EUR250 per project for a retail model(s)? -open reply-(optional) investor who wishes to participate in crowd-investing without receiving advice or satisfying an appropriateness test. No othere maximum or minimums should be set.  
  • 5. What other measures would be needed to grant access to markets but also address the risks of financial forms of crowdfunding? -open reply-(optional) Proportionate EU-wide regulation of peer-to-peer lending and crowd-investing in line with payment services and e-money regulation. Please see the attached response to the UK Financial Conduct Authority's recent consultation on regulating peer-to-peer lending and crowd-investing, especially Annex 2  What framework would suit crowdfunding with social goals? How to verify social objectives or impact? What level of investor protection is needed? -open reply-(optional) Crowd-investing for social goals should meet the same requirements as for-profit crowd-investing. Unfortunately, otherwise certain investment opportunities may be 'dressed-up' as having a social purpose in order to escape regulation. Social enterprises should also benefit from for-profit rigour.  Do you have any other comments? Proportionate EU-wide regulation of peer-to-peer lending and crowd-investing in -open reply-(optional) line with payment services and e-money regulation. Please see the attached response to the UK Financial Conduct Authority's recent consultation on regulating peer-to-peer lending and crowd-investing 

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