Crowdfunding: often overlookedlegal concerns4 October 2012Andrew Solomon, Corporate & Commercial Solicitor                ...
Financial Services Authority •   Regulated Activities •   Financial Promotions •   The FSA’s opinion                      ...
Regulated Activities (1) • The ‘general prohibition’ under FSMA 2000:    > a person (individual or corporate body) may not...
Regulated Activities (2) • Dealing in investments as principal or agent • Arranging deals in investments • Advising on inv...
General exclusions • Regulated Activities Order 2001    > Sets out circumstances where the general prohibition does not   ...
Financial PromotionRestriction • A person (individual or body corporate) must not, in the   course of business, communicat...
Financial promotion:exclusions • Financial Promotion Order 2005    > Sets out exemptions to the financial promotion restri...
FSA Opinion: August 2012 • “Many crowdfunding opportunities are high risk and complex” • “We believe that crowd funding sh...
Questions Andrew Solomon, Corporate & Commercial Solicitor Kingsley Napley LLP asolomon@kingsleynapley.co.uk 020 7369 3794...
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Kingsley napley crowdfunding legal concerns

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Kingsley napley crowdfunding legal concerns

  1. 1. Crowdfunding: often overlookedlegal concerns4 October 2012Andrew Solomon, Corporate & Commercial Solicitor kingsleynapley.co.uk
  2. 2. Financial Services Authority • Regulated Activities • Financial Promotions • The FSA’s opinion kingsleynapley.co.uk
  3. 3. Regulated Activities (1) • The ‘general prohibition’ under FSMA 2000: > a person (individual or corporate body) may not carry out a regulated activity in the UK unless authorised (by the FSA) or an exemption applies • Contravention is a criminal offence – up to 2 years in prison and/or an unlimited fine kingsleynapley.co.uk
  4. 4. Regulated Activities (2) • Dealing in investments as principal or agent • Arranging deals in investments • Advising on investments • Etc etc etc kingsleynapley.co.uk
  5. 5. General exclusions • Regulated Activities Order 2001 > Sets out circumstances where the general prohibition does not apply > E.g. the exclusion applicable to groups and joint enterprises kingsleynapley.co.uk
  6. 6. Financial PromotionRestriction • A person (individual or body corporate) must not, in the course of business, communicate an invitation or inducement to engage in investment activity… • …unless authorised by the FSA, the content of the communication is approved by an authorised person or an exemption applies • Contravention is a criminal offence – up to 2 years in prison and/or an unlimited fine kingsleynapley.co.uk
  7. 7. Financial promotion:exclusions • Financial Promotion Order 2005 > Sets out exemptions to the financial promotion restriction e.g. when the communication is made to certain recipients: » Self certified sophisticated investors » High net worth companies etc. kingsleynapley.co.uk
  8. 8. FSA Opinion: August 2012 • “Many crowdfunding opportunities are high risk and complex” • “We believe that crowd funding should be targeted at sophisticated investors” • “Almost all crowdfunds are not authorised by us and you will not have access to the Financial Ombudsman Service (FOS) or Financial Services Compensation Scheme (FSCS) if things go wrong” kingsleynapley.co.uk
  9. 9. Questions Andrew Solomon, Corporate & Commercial Solicitor Kingsley Napley LLP asolomon@kingsleynapley.co.uk 020 7369 3794 kingsleynapley.co.uk
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