On May 30, 2014, the French government issued Ordinance (a
government act having the force of a legislative action) no.
2014-559 dated May 30, 2014 relating to crowdfunding, with the
stated aim of lifting some of the regulatory constraints hindering
the development of crowdfunding in France, while maintaining
sufficient investor protection. To this end, the ordinance
addresses each of the three forms that crowdfunding typically
takes, i.e., securities investments, loans and donations depending
on the form of the requested funding.
First, in terms of securities investments, operators of websites
matching the supply and demand of securities will need to seek
registration as investment firms (as is already the case when an
investment service occurs) or as crowdfunding advisers (conseiller
en investissements participatifs). Qualifying entities seeking
registration as crowdfunding advisers will need to be based in
France, i.e., no passporting rights will be available to them. They
will have to comply with a number of rules of good conduct,
including: the presentation of risks, the performance of adequacy
tests, transparency on inducements, rules on solicitation and
anti-money laundering regulations. Further, a new exemption to
public-offering rules is created where a number of criteria are
met, notably that the value of the placement does not exceed a
threshold to be set by way of secondary legislation during any
Second, in terms of crowdfunding by way of loans, the scope of
bank monopoly rules whereby lending may be performed only by
licensed institutions had to be revised. Pursuant to a new
exemption to such rules, individuals (as opposed to legal entities)
may, on a nonprofessional or otherwise commercial basis, extend no
more than one loan per project. Interest rate charged is capped to
the statutory interest rate further increased by five percentage
points. Operators of websites matching the supply and demand of
loans will have to seek registration as crowdfunding intermediaries
(intermédiaires en financement participatif).
A significant number of issues are still to be set by way of
secondary legislation, including amendment to the Securities
Regulator (AMF) Rulebook, for the regime to become fully operative.
We will monitor such clarifications.
The new regulatory framework is due to come into force on
October 1, 2014 for the most part.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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