As crowdfunding kicks in everywhere in the world, Portugal introduces new rules on crowdfunding this week.
The text is the Portuguese equivalent to the American JOBS Act. It defines all types of crowdfunding (reward, loan, donation and equity) and establishes rules for each of them.
Below are key highlights of the new legislation:
- There are no restrictions on platform ownership. Any person or company can own them, regardless of their business area
- Platforms can operate in more than one crowdfunding type. They must obey to the rules specific to each mode
- Platforms must ensure confidentiality of every information present in them
- Platforms cannot recommend investments nor offer any kind of sales commission to their personnel
- Platforms cannot offer investment funds nor keep securities. All securities must be issued directly by the companies seeking funds
- Loan and equity campaigns cannot be present in more than one platform
- Rewards and donation based crowdfunding initiatives cannot raise more than 10 times their initial goal
- Rewards and donation based campaigns must communicate Direção Geral do Consumidor, the consumer protection authority before they start their activities
- Loan and equity types must all be communicated to CMVM (Comissão do Mercado de Valores Mobiliários), the Portuguese equivalent to Securities and Exchange Commission
- Loan and equity types must establish a maximum raising value, regardless of the goal
- CMVM can establish a maximum annual value that an entity can raise or an investor can invest
Attention should be given to situations that cause conflicts of interest, which are cited several times in the law. It says that platforms must do their best efforts to avoid such situations, which can arise when personnel involved with the platform participate in crowdfunding campaigns within it, in any roles, when their interests are contrary to that of investors or beneficiaries.