Major changes are envisaged regarding crowdfunding in Poland from autumn this year. As of 10 November 2021, in Poland, as in the other EU countries, Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937 (“Regulation”), will take effect. Moreover, the Polish government is already working to draft provisions to implement that Regulation.
The main aim of EU lawmakers when adopting this Regulation was to create a common legal framework for crowdfunding to function in the EU. A crowdfunding service, which is at the core of the new legislation, connects investors interested in financing business ventures with owners of such projects via a crowdfunding platform. The Regulation regulates only two out of four main kinds of crowdfunding, which are the investment and lending (debt) variations. Hence, in addition to the strict rules, there is donation-based crowdfunding and rewards-based crowdfunding.
The most important elements of these include:
- a requirement to obtain a crowdfunding service provider license; this will be a regulated activity as of 10 November 2021;
- creation of a single, central provider register maintained by the European Securities and Markets Authority (ESMA);
- the possibility of creation of crowdfunding offers up to a maximum of EUR 5,000,000 within a 12-month timeframe;
- a legal distinction as to the level of protection of investors involved in projects made available via crowdfunding platforms. Depending on the capacity in which the investor acts, they can be classified as an experienced or inexperienced investor;
- a requirement to provide investment information on a key investment information sheet – this is a uniform and transparent document giving the main details of the project, the author, and investment information;
- a reflection period of four calendar days from the investment order being submitted, preceding conclusion of the agreement. During this period, an inexperienced investor does not incur any consequences for withdrawing their offer;
- the possibility of providing crowdfunding services throughout the EU on the basis of a single license granted in any EU country. In such a case, cross-border provision of services is permitted on condition of prior notification of the contact point in the home country (the body created by a member state, not necessarily a regulatory authority), giving detailed information about particular aspects of the services envisaged to be provided in other member states;
- regulatory requirements, including prudence requirements, on the part of the crowdfunding services provider, such as avoiding conflicts of interest, capital requirements, outsourcing requirements, and obligations with respect to using licensed payment service providers – both kinds of regulated activity can be conducted in a hybrid manner on the basis of two separately issued permits.
There is to be an important addition to the Regulation, which is the Regulatory Technical Standards. These are intended to regulate in detail conflict of interest, complaint review, or for instance credit risk assessment, and other issues. The first of these are due to be published after 10 November 2021.
In addition, the Regulation amends the Whistleblower Protection Directive (Directive 2019/1937), and this means that crowdfunding service providers will be subject to a range of obligations under that directive, such as the obligation to establish internal and anonymous channels for reporting breaches of law.
On 5 May 2021, the Council of Ministers published a project of bill on monitoring of providers of crowdfunding services for commercial ventures, and this was the first time the Polish legislature took measures to implement the Regulation into the Polish legal system. Under the proposal, the Polish government will make the Polish Financial Supervision Authority (KNF) the competent authority for monitoring providers of crowdfunding services. This will mean that the KNF will have a range of regulatory powers, such as suspending specific crowdfunding offers or suspending providers’ operations.
In addition to the above, the bill also envisages:
- appropriate administrative and criminal penalties for failing to comply with the regulation or act (such as a fine of up to PLN 5,000,000 for providing crowdfunding services without a license);
- responsibility under civil law and criminal law for making correct and true statements in documents providing information drawn up in connection with a crowdfunding offer;
- provisions on duty of confidentiality towards clients and rules on storage of crowdfunding service documentation for commercial ventures;
- simplifying certain disclosure requirements that apply to securities issuers – in cases of public offers conducted elsewhere than a crowdfunding platform but via an investment firm, the issuer will be able to draw up only the key investment information sheet instead of an information memorandum.
The project of bill is due to be approved by the Council of Ministers in Q III 2021.
Cracow University of Economics Professor (PhD Habil.) Jan Byrski attorney-at-law,
Michał Słuszniak, trainee attorney-at-law