On 16 April 2015, the Congress finally approved the Bill aimed at improving the financing conditions of SMEs. This is the first time a Spanish Bill regulates the alternative ways to finance a project, such as crowdfunding. After going through Parliament, and once the Congress and the Senate proposed their amendments, the final text includes some changes which were not in the version initally submitted by the Spanish Government.
In addition to our analysis of the original Bill published on 4 November 2014, we are now highlighting some of the most significant changes approved during the parliamentary process, and which have garnered much attention in Spain as they are consistent with this emerging collaborative economy:
Regarding the financial requirements needed to establish a crowdfunding or crowdlending entity (the so called “collaborative financing platforms”) some changes have been introduced, in particular:
- The initial investment that the platforms need to begin their activities remains unchanged and must be of, at least, 60,000 Euros fully paid up. However, this payment must now be in cash.
- Despite this requirement, it is still possible to pay a lower amount of share capital, as long as the entity has a professional liability insurance, a guaranty or equivalent, which would have to cover at least 300,000 Euros in damages and 400,000 Euros for any other kind of claim.
- A new feature is that these financial requirements may be fulfilled by combining the capital with the insurances, guaranties or warranties until a level of protection similar to those described above is reached.
The changes related to the requirements to register the platforms and their transparency obligations have less of an impact, although the following is worth mentioning:
- The specifications of the mechanisms to provide information about a platform’s activities to any potential investors will be carried out by publishing such information in the platform’s webpage. This information should be in a visible place.
New features have also been introduced regarding the investment limits that this type of platform may manage:
- Maybe the most significant change, requested by the crowdfunding industry, is the increase in the funds that collaborative financing projects can raise. When the projects are exclusively addressed to accredited investors, they may be able to raise funds for a maximum amount of 5 million Euros per year. However, the maximum amount of 2 million Euros for projects funded by non-accredited investors is maintained.
- The investment limits, previously envisaged by the Government for non-accredited investors, of 3,000 Euros per project and 10,000 Euros per platform, within a period of 12 months, remain unchanged. As does the lack of investment limits for accredited investors.
New features regarding the CNMV:
- This agency will now have the capacity to and the obligation of overseeing the activities of the platforms.
- The contracting system of the CNMV shall be more flexible in order to incorporate inspectors specialized in this type of alternative funding mechanisms.
Finally, it is worth mentioning, among other things, the following general changes:
- The possibility of extending the corporate purpose of the platforms beyond crowdfunding or crowdlending. This would allow the platforms to provide advice to sponsors on IT, marketing, advertising and design issues related to the projects published on the platform.
- The platform’s period of inactivity that would result from its dissolution has been extended to one year. The CNMV will carry out the dissolution by revoking the authorization needed to operate.
Finally, these changes are aimed at facilitating the creation of these platforms, which are growing in Spain as a result of the increase of expressions of collaborative economy; this is in addition to regulating their development and creating control mechanisms, which will be assimilated by other entities in the market, including credit entities for crowdlending activities, with the express intervention of the Bank of Spain.
The final text was published in the Official Gazette on 28 April 2015.