 | Last week the German Government approved a regulation to protect small investors investing through online securities crowdfunding portals. The law, originally drafted in 2014, was seen by many industry players as way too restrictive, potentially able to kill the growing German market of digital investments. For the relief of many stakeholders, the approved version is softer than the original one, having eliminated a couple of the most stringent restrictions. |
A regulation for online investing has been on the table of Angela Merkel for a while, as a measure to foster the growth and establishment of a digital economy in Germany. The first draft of such legislation received many criticisms from the German crowdfunding ecosystem, which deemed it overly restrictive, as we explained in this blog post. In fact the proposed rules included points which created unnecessary obstacles to the process of online investing. An example is the rule according to which investors had to send the investment information sheet via mail and manually sign it.
The approved version of the Small Investors Protection Bill includes a reviewed Crowdinvesting Exemption, which leaves out previous proposed points regarding the investment information sheet mailing and signature and increases the cap under which fundraisers don’t need to produce a long prospectus from €1million to €2.5 million. Furthermore, the investment limit for retail investors has been increased up to €10,000 if they can provide a proof of their assets or income of a level deemed sufficient to bear the risk of loss. Otherwise it remains at €1,000.
Germany’s crowdinvesting regulation seems to have followed, at least partially the feedback and opinions coming from the interested audience in the field. We will see if it struck the right balance, allowing digital investing to flourish in the country.
References
Nienaber, M. (2015). Germany approves crowdfunding rules to protect small investors. Reuters.
The approved version of the Small Investors Protection Bill includes a reviewed Crowdinvesting Exemption, which leaves out previous proposed points regarding the investment information sheet mailing and signature and increases the cap under which fundraisers don’t need to produce a long prospectus from €1million to €2.5 million. Furthermore, the investment limit for retail investors has been increased up to €10,000 if they can provide a proof of their assets or income of a level deemed sufficient to bear the risk of loss. Otherwise it remains at €1,000.
Germany’s crowdinvesting regulation seems to have followed, at least partially the feedback and opinions coming from the interested audience in the field. We will see if it struck the right balance, allowing digital investing to flourish in the country.
References
Nienaber, M. (2015). Germany approves crowdfunding rules to protect small investors. Reuters.
 | 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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