Platform helping lenders to find businesses that need financing. Licensing time – from 1 month. Equity capital – from EUR 40 000.
European Crowdfunding Directive coming soon predicts crowdfunding boom in Europe. Banks and other traditional lenders are not able to finance all the businesses need financing because of the risk and other regulatory requirements. Crowdfunding platforms provide a marketplace for other lenders to fill the gaps and finance existing and new businesses. Interest rate paid by the crowdfunding platforms to the lenders is usually higher than paid by traditional finance institutions.
Crowdfunding is ideal financing tool to finance start-ups, letting lenders to get the share in start-ups, lend them through bond or token issue expecting higher return. Lithuanian Crowdfunding Law makes Lithuania one of the few jurisdictions in European Union having modern, clear and transparent crowdfunding regulation. Securities issued by licensed crowdfunding platforms are allowed for distribution in all European Economic Area (EEA) allowing to attract capital for crowdfunding needs from all around European Union (EU).
The Bank of Lithuania (regulator) makes the decision regarding inclusion in the list (licensing) within 30 business days.
The capital requirement for the operator amounts to EUR 40,000.
Crowdfunding instruments. Rise of capital through STO and Token offerings
Licensed crowdfunding platform operators are permitted to raise capital of their client companies through crowdfunding platforms using different instruments: (i) simple loan agreement; (ii) issue of debt securities (i.e. bonds); (iii) issue of equity securities (i.e. shares); (iv) assignment of claim rights deriving from existing credit agreements. Modern instruments like Initial Coin Offering ICO, Security Token Offering STO and other kinds of utility Token offerings can be used in order to raise the capital of investment project owners through licensed crowdfunding platforms. This opens completely new opportunities distribute investment instruments all over European Union.
Passporting of Crowdfunding license in Europe (EU/EEA area)
Lithuanian Crowdfunding license considered as Lithuanian national license. In case the local regulations of other EU/EEA member states does not require domestic Crowdfunding licensing, national Lithuanian license frequently used rising the funds from the investors in other European jurisdictions without any restrictions coming from other regulators. Moreover, full passportization of Lithuanian Crowdfunding license within the EU/EEA area can be achieved combining Crowdfunding license with investment advisory or securities brokerage license issued under MIFID directive or other passportable license. Both licenses can be issued for one company.
Requirements depending on the value of crowdfunding transaction
Simplified project owner information disclosure requirements are applicable for the crowdfunding transactions amounting less than EUR 100 000 in 12 months.
The crowdfunding project owner willing to enter into financing transactions for the total amount ranging from EUR 100,000 up to EUR 5 million in 12 months must draft a memorandum disclosing the basic information about the project owner and crowdfunding project.
The project owner willing to enter into financing transactions for the total amount of EUR 5 million or more in 12 months can carry out the project only by issuing and registering securities and preparing securities issue prospectus.
Licensed crowdfunding platform operators are considered as licensed financial advisory firms and do not require additional licensing. Crowdfunding Platform Operators may provide following investment advisory services for investors (i) reception and transmission of orders and (ii) investment recommendations.
More about FinTech licensing – www.ecovis.lt/fintech
More about ECOVIS experience – https://ecovis.lt/fintech/why-lithuania/