Very short introduction to the Greek legislative environment in relation with Crowdfunding.

1. INTRODUCTION TO THE GREEK LEGISLATIVE ENVIRONMENT FOR CROWDFUNDING
Serres, 26-6-2013
In Greece, like in most European countries, there is no crowdfunding-specific legislation. Therefore, different rules apply
for the core activity of each one of the crowdfunding models (Donation-Based, Rewards-Based, Equity-Based and
Lending-Based). At the same time, general rules apply regarding the offering of such services over the internet.
In this paper, we will briefly – though, exhaustively – refer to the legal areas that one should pay attention to prior to
performing crowdfunding-related activities, rather than propose solutions (a task which should be carried out only by an
experienced legal counsel on a case-specific basis).
The common rules that apply to all four models and should be taken into consideration by any crowdfunding portal
operator wishing to offer services to Greek residents, are: (a) Sections A’, B’ and C’ of the Greek Civil Code (General
Rules that apply to all legal transactions, Contract Law and Property Law, respectively, articles 1-1.343), (b) Law
2251/1994 on Distant Sales (implementing Directive 2003/31/EC), (c) Laws 2472/1997 and 3471/2006 on Data
Protection (implementing Directives 1995/46/EC and 2002/58/EC), (d) Laws 2331/1995 and 3691/2008 on Measures to
prevent Money Laundering and Terrorist Financing Activities (implementing Directives 2005/60/EC, 2006/70/EC and
2008/20/EC), (e) Law 3862/2010 on Electronic Payments (implementing Directives 2007/44/EC, 2007/64/EC and
2010/16/EC) and (f) Legislation on Intellectual Property Protection (mainly Laws 2121/1993 on intellectual property, and
213/1975 and 1733/1987 on patents). There is also a number of newer Directives not yet fully implemented in local law,
which should be considered of (e.g. Directive 83/2011/EC on Consumer Protection). Moreover, any crowdfunding portal
operator wishing to offer crowdfunding services to Greek residents must publicise adequate data about the portal owner,
adopt adequate anti-fraud measures against potential malicious use of its service and have a serious consideration
about the applicable tax legislation, paying specific attention to cross border transactions.
On the model-specific level, Donation-based crowdfunding, to begin with, is mainly regulated by the Civil Code (articles
122-126 on Fundraising Committees and 496-512 on Donations), as well as Law 5101/1931 on Fundraising Activities.
The general rule is that fundraising activities are prohibited without a purpose-specific state license. Although the
legislation is neither extensive nor difficult to understand, the operating burden may well be characterised as huge for the
person that will carry it (either the portal operator or the fundraiser).
Rewards-Based crowdfunding is perhaps the less problematic model, since it is regulated mostly by the Law of Sales
and Exchanges (articles 513-573 of the Civil Code). No specific rules apply other than the general rules that apply in any
sale of commercial goods or services, which are pretty straight forward and do not require the operator to hold a specific
license other that the one prescribed in Distant Sales Law.
Equity-Based crowdfunding, on the other hand, is the most regulated model, both on international and local level. The
core of the activity is actually a whole segment of law, called Public Securities Offering Legislation that deals with the
unsolicited offering of financial instruments (like the shares of a company) to the general public. On a European level (i.e.
the European Economic Area member-countries), the activity is governed by two Directives, the so called Prospectus
Directive (2003/71/EC as amended by Directive 2010/73/EC), which prescribes how and to what extent the public
offering of securities is supervised by the local Capital Market Regulators (usually the Capital Market Commission or the
Central Bank of each country), and the so called MiFID Directive (Directive 2004/39/EC on Markets in Financial
Instruments), which regulates who and under what license may perform such activities. The local applicable laws are
article 8A of Law 2190/1920 that applies specifically for the limited by shares Companies, article 10 of Law 876/1979 on
Public Securities Offering and Law 3401/2005 on Prospectus Requirements. Still, both the European and the Greek
legislative environment may be characterised as crowdfunding-friendly with regards to Equity-Based crowdfunding for
startups, because the general rule is that there are minimal licensing and reporting requirements for the public offering of
securities under the threshold of 150,000 Euros per year per fundraiser.
Finally, Lending-Based crowdfunding, to my opinion, is impermissible in the EEA without holding a Banking License. The
difference with the United States is that such an activity has recently become permissible under a specific license issued
by the local Capital Markets regulator (i.e. the Securities and Exchanges Commission).
In conclusion, Greece may be characterised as a jurisdiction fairly open to Rewards-Based and Equity-Based
crowdfunding, as jurisdiction unfairly closed to Donation-Based crowdfunding and selectively open (only to Banks)
regarding Lending-Based crowdfunding.
Constantinos Parissis LLB, MSc
Attorney at Law & Economist
http://gr.linkedin.com/in/costasparissis
parissis@gmail.com