The Law of 18 December 2016 on crowdfunding (Wet tot regeling van de erkenning en de afbakening van crowdfunding en houdende diverse bepalingen inzake financiën/Loi organisant la reconnaissance et l’encadrement du crowdfunding et portant des dispositions diverses en matière de finances) was published in the Belgian Official Journal on 20 December 2016 and entered into force on 1 February 2017 (“Crowdfunding Law”).
The Crowdfunding Law recognises specific alternative financing platforms that provide financing solutions mostly to small and medium-sized companies and start-up companies by raising funds from the public through the issuance of securities (beleggingsinstrumenten/instruments de placement).
Before the entry into force of the Crowdfunding Law, crowdfunding platforms had to comply with an array of financial laws. The lack of a specific regulatory framework was no longer in line with the expansion of the digital economy and the increasing number of start-up companies in demand of alternative sources of financing.
The main features of the Crowdfunding Law are as follows:
- Prior Authorisation: Alternative financing platforms falling within the scope of the Crowdfunding Law must be granted a licence by the Financial Services Market Authority (“FSMA”) prior to engaging in crowdfunding activities for the benefit of Belgian investors. This only concerns equity and debt-based platforms, to the exclusion of platforms where investors can donate to a company or a project, or can pay in exchange for a consideration in kind. The authorisation process will be conducted by the FSMA on the basis of a file prepared and submitted by the candidate alternative financing platform, which will have to show the “fit and proper” character of its shareholders, directors and managers.
- FSMA Supervision: The FSMA ensures that authorised and licenced alternative financing platforms comply with specific conduct of business rules. In accordance with these rules, platforms must ensure that investors have sufficient experience and knowledge to invest in the proposed securities, and must communicate any change of control of the company operating the alternative financing platform. Failure to comply with these rules may result in administrative and/or criminal sanctions.
- Prospectus exemption: Licenced and authorised alternative financing platforms are exempted from the obligation to publish a prospectus, provided (a) the total amount of the offering is below € 300,000; and (b) the individual subscription amount is below € 5,000.
- Tax benefits: The Crowdfunding Law allows investors investing through a licenced and authorised alternative financing platform to benefit from the tax advantages provided for by the Law of 10 August 2015 (Programmawet/Loi-programme) which created a tax shelter that includes an exemption of withholding tax for loans and a tax reduction for capital investments in specific start-up companies.
