European crowdfunding leaders will meet this month to discuss the implementation of European Crowdfunding Service Provider regulation (ECSPR) and the Key Investment Information Sheet (KIIS) – a requirement for issuers raising money under the rules. The European Working Group will be meeting for the 2nd time to review pan-European crowdfunding.
ECSPR was created to enable a harmonized ecosystem for online capital formation across the EU. Previously, a firm needed to adhere to each member state’s national regulations if they wanted to solicit funds from the country. ECSPR is expected to boost access to capital for early stage firms as well as improve opportunities for smaller investors as they gain access to a growing asset class – private securities. The relevant authority must first approve any platform that seeks to operate under ECSPR in a member state – a requirement that has added some nuance to the ecosystem. As it stands today, an issuer may raise up to €5 million across the EU.
The KIIS is required under ECSRP, and crowdfunding platforms must provide the document outlining the risks involved in securities crowdfunding.
To quote the rules:
“The key investment information sheet should be drawn up by the project owners, because the project owners are in the best position to provide the information required to be included therein. However, since it is the crowdfunding service providers that are responsible for providing the key investment information sheet to prospective investors, it is the crowdfunding service providers that should ensure that the key investment information sheet is clear, correct and complete.”
Any shortcomings in the KIIS can result in a canceled or suspended offering or potentially other actions. At the same time, the KIIS does not need to be approved by the relevant authority. The document must be produced in at least one official language of the EU.
A platform-level KIIS is also required.
The European Securities and Market Authority (ESMA) is currently collecting these documents.
As for the meeting of the European Working Group, the notice explains:
“We are focussing on the Key Investment Information Sheet, which is the main document which the issuers of securities and loans have to provide to the investor. The KIIS is six pages long. At the meeting, we will discuss our experiences with the KIIS, and develop suggestions for making the KIIS better suited to the needs of the investors. The outcome of this meeting is a joint policy-paper of the European Crowdfunding and Fintech Associations.”
