The European Crowdfunding Network (ECN) abides to a number of core objectives including the promotion of the highest ethical and professional standards within the crowdfunding industry in Europe. ECN members represent a wide range of industry actors pursuing a variety of business models and strategies around crowdfunding. It is part of the ECN’s objectives to provide an adequate self-regulatory framework to its members and as part of that the ECN is publishing the following guiding principles as its Code of Conduct for observation and application by its members and the European crowdfunding industry at large.
The aim of the Code of Conduct is to:
- State the principles of ethical behaviour that the ECN and its members shall abide by
- Assert a collective view that high and professional standards of commercial and social honour are just and equitable principals worth promoting and abiding by
- Provide the basis for consideration of and dealing with lapses in professional conduct within the ECN
- Provide transparency on business models and industry data
1. Legal effect
The ECN Code of Conduct rights merely sets out best practice principles and do not constitute Court-enforceable regulations.
It is expected that all ECN Platform Members (hereafter “ECN Members”) engage to respect the ECN Code of Conduct. National or other Guidelines of Best Practice are not meant to be overruled by this Code of Conduct, but a mutual benefit is aimed for through the general terms outlined here. ECN Members that are also members of national or other acknowledged trade bodies are expected to respect their relevant Guidelines.
The guiding principles of the ECN Code of Conduct are:
1.1 Act with integrity and in fairness
Integrity is the fundamental building block of trust in all relationships. Acting with integrity implies not seeking to evade or avoid the consequences of error. Fairness then means playing by the rules, based on facts and circumstances.
1.2 Keep your promises
Ethical business behaviour implies keeping promises regardless of whether or not there is a legal obligation to do so. Promises made are of equal importance regardless of to whom they are made.
1.3 Disclose conflicts of interest
Conflicts of interest arise inevitably within business. Conflicts of interest should be diligently identified and disclosed to all parties concerned.
1.4 Foster data transparency
In order to foster transparent and open business practices in the field of crowdfunding, the regular provision of non-confidential or sensitive data on industry and business models to the ECN – and the subsequent publication of accumulated statistics through ECN or contracted affiliates – are undertaken and supported by ECN members.
1.5 Maintain confidentiality
In the ordinary course of business both individuals and firms will obtain commercially or otherwise sensitive information from other market participants. In order to safeguard the interest of disclosing parties’ reasonable steps must be taken to protect information from inappropriate disclosure.
1.6 Do no harm to the industry, society or environment
Success in business sometimes requires the generation and analysis of options and the pursuit of competitive advantage. To this end, all business should be conducted in a responsible manner and any practices that potentially could be damaging to the image and interest of the industry, society or environment must be avoided.
1.7 Use, at all times, adequate and appropriate human and technical resources that are necessary for the proper management of a crowfunding platform.
Such resources include:
- access to a sufficient range of projects and know how in the selection of projects,
- secured IT and payment systems and processes.
2. Specific compliance procedures
2.1 Standardized information sheet
Subject to more stringent national or European regulations, information on project owners shall be made available by each Member on his website according to a standardized information sheet which shall be updated from time to time by the ECN Executive Board. Such standardized information sheet shall set minimum information standards on various data, including the social and environmental impact of the projects presented on the Member’s platform.
2.2 Reporting requirements for Members
Members shall send to the ECN Executive Board on a yearly basis a short report containing several key performance indicators on transparency standards as provided in the reporting template updated by the ECN Executive Board.
2.3 Audit by or third party auditors
ECN representatives or third-party auditors assigned by the ECN Executive Board may carry out an audit on compliance procedures adopted by any Member and shall have at all times access to any relevant information from such Member in this respect.
2.4 Best practice label
ECN reserves the right to deliver from time to time its own and independent rating on compliance performance by each Member with respect to procedures referred to in sections 2.1 to 2.3. Such rating shall be adopted by the ECN Executive Board after discussions with said Member and disclosed on the ECN’s website subject to the Member’s prior acceptance.
2.5 Dispute resolution between Members
In case of a dispute between ECN Members, parties will always seeking a negotiated solution. Upon written demand by all parties, ECN Members may appoint a mediator in order to help Members reach an amicable settlement.
3.1 Effective date – duration
This Code of Conduct will enter into force on 1st July 2015 for an indefinite period of time.
This Code of Conduct can be amended, supplemented or changed by decision of the ECN Executive Board. Any amendment shall apply from the date of its publication on the ECN website, save anything to the contrary.