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Innovation & Regulation in Finance

An overview of the French Crowdfunding Regulation

3 min read

The regulatory authority in France responsible for the oversight of participants and products in French financial markets and hence crowdfunding activities is the Autorité des Marchés Financiers (AMF). Together with its sister organisation, ACPR (Autorité de contrôle prudentiel et de résolution –  Prudential Supervision and Resolution Authority), which monitors banks and insurance companies, the AMF has created a separate division, operational as of 1 June 2016, to respond to changes in consumption patterns which have been amplified by technological innovation and the globalisation of financial services. The FinTech, Innovation and Competitiveness (FIC) division will analyse innovations taking place in the investment services industry and identify competitiveness and regulation challenges.

France has introduced a crowdfunding regulation, which came into force on 1 October 2014 called Official order No. 2014-559 of
 30 May 2014 on crowdfunding and its implementing decree No. 2014-1053 of 16 September 2014 specify the regulatory framework applicable to crowdfunding.

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The order created the new status of crowdfunding investment adviser (CIP, for ‘conseiller en investissements participatifs’) which is based on the Financial Investment Adviser
 (FIA) status. Internet crowdfunding platforms have to either adopt
 this new status and be registered
 in the ORIAS ledger as a “CIP”, or
 else adopt the status of investment service provider (PSI for ‘prestataire en services d’investissement’). The order also introduced a new situation not constituting a public offer of financial securities, hence not covered by a prospectus approved by the AMF. This involves offers for which the amount over twelve months does not exceed €1 million and which are made via Internet crowdfunding platforms. These offers are eligible to simplified joint-stock companies (“SAS”: Société par Actions Simplifiée) provided that they comply with certain conditions.

With a concern for protection of the public, detailed information must be published on the website of the crowdfunding platform, in particular concerning the characteristics of the project to be funded, the securities offer and the charges invoiced to the investor.

For loans and donations, the order allows private individuals to grant, under certain conditions, a loan remunerated at a xed rate, and creates the status
of crowdfunding intermediary (IFP
 for ‘intermédiaire en nancement participatif’) which corresponds to the activity of establishing a relationship, 
by means of a website, between project promoters and people financing the project by means of loans with
 or without interest, or alternatively donations.

For more information as well as the reference texts, consult the information provided on the AMF website here.

 

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