At the beginning of July a new section dedicated to crowdfunding was published on the website of the Finnish Financial Supervisory Authority (FIN-FSA). The Nordic Country, which has been hosting for a few years a flourishing securities crowdfunding scene, now has more precise guidelines on how securities crowdfunding (e.g. equity and bonds) should be legally considered.
In particular, FSA distinguishes between loan- based crowdfunding and securities crowdfunding. The former does not require any specific regulation and it is not subject to supervision by FIN-FSA. The latter instead requires an authorization for those portals that conduct one or more of the following activities:
- “Bring together parties to a business transaction related to a financial instrument in the manner that enables execution of a transaction between these parties”
- Give advises on investments
- “offer an issuer of a financial instrument a service for the purpose of acquiring investors”.
However FIN-FSA made an exemption to the prospectus rule, which requires every company issuing securities to publish a prospectus approved by the Supervisory Authority: for those companies offering less than €1,5 million is not compulsory the publication of such prospectus. Nevertheless, they must provide a sufficient level of information “on factors that may have a material effect on the value of the shares”. The sufficiency of information will be valued depending on the investment experience of the target group of investors. Therefore, in some cases, the information to provide may be as much as that required by the prospectus.
Even though securities crowdfunding is still treated within the current legal framework, Finland has made an important step by providing some guidelines to this new financial source and acknowledging its potential for start-ups and SMEs.