Finland Releases Guidelines for Securities Crowdfunding

The crowdfunding scene in Europe is evolving fast. This year France, Spain and the UK adopted regulations for securities crowdfunding, while the European Commission officially announced its support to crowdfunding, as a valid financial source, able to help fuel Europe’s sustainable growth. In Finland, like in Sweden, the crowdfunding scene has been flourishing and active for a few years now, with more and more actors getting involved.

At the beginning of July the Finnish Financial Supervisory Authority (FIN-FSA) published on its website the guidelines for securities crowdfunding in the country, which until then has been working in different ways under to the existing legal framework.

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The guidelines clear all doubts on how securities crowdfunding (i.e. equity and bonds) should be legally considered.

In particular, FIN-FSA distinguishes between:

• loan-based crowdfunding which does not require any specific regulation and it is not subject to supervision by FIN-FSA.
  
  
• equity crowdfunding which instead requires an authorisation for those portals that conduct one or more of the following activities: 1) “Bring together  parties to a business transaction related to a financial instrument in the manner that enables execution of a transaction between these parties”; 2)Give advice on investments; 3)“offer an issuer of a financial instrument a service for the purpose of acquiring investors”.

However, issuers using equity crowdfunding to raise capital can benefit from an exemption to the prospectus rule, according to  which every company issuing securities is required to publish a prospectus approved by the Supervisory Authority. The exemption, instead, allows those companies offering less than €1,5 million to the public not to publish such prospectus, which is often time-consuming and expensive to produce. Nevertheless, issuers are still required to provide a sufficient level of information “on factors that may have a material effect on the value of the shares”, as FIN-FSA writes. The sufficiency of information will be valued depending on the investment experience of the target group of investors. Thus, in some cases, the issuer will have to disclose as much information as that required by the prospectus.

The guidelines published by FIN-FSA on crowdfunding represent a further step for the Finnish crowdfunding, which is now officially recognized by the local financial authority. Hopefully the guidelines will bring more clarity and increase the transparency in this young market, fostering even more the growth of the Finnish crowdfunding market.

References
Finnish Financial Supervisory Authority. http://www.finanssivalvonta.fi/en/Authorisations/crowdfunding/Pages/Default.aspx

Image credit to: Kari Söderholm 

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About the author - Irene Tordera

Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.

During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.

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