Spain Government Gives Green Light to Improved Crowdfunding Rules

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Only a few days after Germany approved its Small Investors Protection Act, the Spanish Government gave its approval to a legal framework for crowdfunding in the country. The approved rules, however, differ significantly from the first draft which was published about one year ago and considered by many stakeholders too restrictive for the crowdfunding sector to flourish. The second, definitive version builds on the previous one and improves it by changing some of those rules that were deemed too restrictive. The overall result is a regulation that could actually make it easier for investors and SMEs to use crowdfunding.

In particular, the following rules have been introduced:

  • Taking as example the US and UK legislations, Spain now makes a distinction between “accredited investors” and non accredited ones (i.e. retail investors). According to the new rules, are eligible to become accredited investors:
    1. All the institutional investors;
    2. The medium and large enterprise with at least assets for  €1 million, revenues of €2 million or equity capital of € 300,000;
    3. All the individuals with at least €50,000 income per year or with net assets of minimum €100,000 value.
  • Retail investors can now invest up to €10,000 per year with a limit of €3,000 per issuer. There is no more a cap on investment for accredited investors.
  • The maximum funding amount for companies has been increased from €1 million to €2 million, unless they target exclusively accredited investors, in which case the limit goes up to €5 million.
  • Crowdfunding platforms have to register with the Spanish financial authority, Comisión Nacional del Mercado de Valores (CNMV), and need a minimum capital of €60,000 or a social responsibility insurance with a minimum coverage of € 300,000 for complaint about damages and a total of € 400,000 per year for any complaints.

Most importantly, the Spanish rules allow companies incorporated in any country of the European Union to raise funds through local online investing platforms, which is something new compared to other crowdfunding regulations that have been published so far in the EU. ECN sees this and in general the Spanish crowdfunding regulation as a good case that could potentially be a virtuous example for other countries. We also acknowledge the efforts made by the local stakeholders in advocating for a more favorable regulation for the sector.

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