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New Crowdfunding Legislation in Spain

The Law 5/2015 of April 27 for the promotion of corporate funding, sets forth in its Title V the legal regime of the participatory funding platforms, giving legal coverage to the activities of "Crowfunding". The bill only regulates those situations in which the investor expects to receive a cash return from its investment or participation, leaving outside the scope of this law the crowfunding instrumented by sale and purchases or gifts.

The law applies to activities perform within the Spanish territory excluding the situation where a Spanish resident, promoter or investor decides at its own initiative to invest in foreign platforms, that is, in case of non-solicited investments. To the extend the company advertises, promotes or obtains clients in Spain, or directs its activities to investors and promoters residing in Spanish territory t it will be considered it renders the services in such market.

The platforms of participatory funding, or PPF are those authorized companies, which activity consists of putting in contact, in a professional manner and through web pages or other electronic means, several individuals or companies that offer funding in exchange of a cash return, so called investors, with individuals and companies, that seek financing on its own name to use it for a project of participatory funding, so called promoters.

To carry out the activity it is required the mandatory prior authorization and registration with the Registry of the Security Exchange Commission, being required the prior binding and mandatory report of the Bank of Spain for platforms that are structured throught loans.

The PPF are subject to a duty of diligence in the admission of the projects and to verify the identity of the promoter, as well as to certain limits in the number of projects and the maximum amount of fundraising. On the other hand, the investors are classified in 2 types, accredited and non-accredited investor, placing certain limits in the investment to be made by the latter as measures of protection of the same. PFP also need to meet some company and financial requirements (exclusive corporate purpose, take the form of capital company, administrators holding recognized business reputation, experience and knowledge in the field, minimum capital of 60,000 Euros, professional civil liability insurance with total coverage of 400,000 Euros for all claims, ..). Information requirements prior to the investment apply.

To obtain additional information about the impact of the new legislation in your company, please contact us with your specific queries through the Contact section. Thank you.

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