Regulatory Changes for Crowdfunding Platform Operators

With the entry into force of the common European Union regulation, ECOVIS ProventusLaw would like to remind crowdfunding service providers to renew current licenses. Otherwise, they will be removed from the list of public crowdfunding platform operators processed by the Bank of Lithuania. The crowdfunding platform operators intending to continue providing these services already in accordance with the EU Crowdfunding Regulation and a Directive on Crowdfunding Service Providers are required to submit to the Bank of Lithuania the documentation necessary for the relicensing procedure no later than by 9 November 2023. This term has now been extended in accordance to the extension of the transitional period for the provision of crowdfunding services by the European Commission.

After this date, the operators of crowdfunding platforms included in the public list processed by the Bank of Lithuania will no longer be authorized to provide crowdfunding services and will not have the right to provide the possibility to enter into new financing transactions through the crowdfunding platforms administered by them.

The Crowdfunding Regulation entered into force on 10 November 2021. It harmonises the requirements for the operation and licensing of providers of crowdfunding services across the European Union (EU), opening up the possibility for our country’s financial market participants to provide crowdfunding services in other EU countries and for crowdfunding platform operators of other EU countries to provide services in Lithuania.

In order to make the relicensing process smoother, The Bank of Lithuania has compiled guidelines on simplified requirements for crowdfunding platform operators being relicensed. The operator has to prepare the following information and documents:

A description of the crowdfunding platform operating model;
Rules for handling complaints of customers;
Description of the governance arrangements and internal control mechanism, including risk-management and accounting procedures;
Description of systems, resources and procedures for the control and safeguarding of the data processing system;
Confirmation of whether the applicant intends to provide payment services itself or through a third party;
Description of the applicant’s prudential safeguards;
Description of operational risks;
Description of the business continuity plan;
Procedures to verify the completeness, correctness and clarity of the information contained in the key investment information sheet;
Information about shareholders, managers;
Description of outsourcing arrangements;
Procedures in relation to investment limits for non-sophisticated investors;
Procedures to verify the completeness, correctness and clarity of the information contained in the key investment information sheet;
Description of the relevant internal rules adopted by the applicant.

Ecovis ProventusLaw is ready to share its knowledge and practice if you need assistance in relicensing or obtaining new European crowdfunding license.

Prepared by Linas Vidžys, Senior Associate of ECOVIS ProventusLaw