On April 1st, the regulatory environment for investment crowdfunding will change in the Netherlands. The Netherlands Authority for Financial Markets (AFM) published recommendations in December of 2014 regarding a regulatory approach for internet finance. A proposal was released back in December that was summarily updated the following month. Anne Hakvoort of FG Lawyers in Amsterdam has published an excellent summary of the changes and what will become law on April 1st.
In brief the changes include:
- Investment limits for retail investors have been increased. Retail amounts have been doubled to €40,000 for equity and €80,000 for loan based crowdfunding.
- All investment crowdfunding platforms must do a test to determine if the investment is appropriate for the specific investor
- Investors have a waiting period of 24 hours to change their mind
- Equity and debt platforms must complete a monitoring form for the AFM on a semi-annual basis to help the AFM monitor the market
Additionally crowdfunding platforms must follow best practices that encourage investors to invest appropriately by following best practices such as diversification. Simultaneously there is a long list of requirements platforms must adhere to regarding risk, ethics, transparency and consistent operational practices.
This is a long prescriptive list and much of it is based on common sense. For industry participants that are engaged in the compliance side you should definitely check this document out.