In August 2015 Portugal adopted a law for online investing which is described in this article. Such law has been translated into rules by the local financial markets authority, Comissão do Mercado de Valores Mobiliários (CMVM), which released this week a first draft, open for public comments until the 21st January 2016.
CMVM distinguishes between professional investors and retail investors. The former comprehend institutional investors and all those individuals with an annual income equal or bigger than €100,000. For this category of investors there is no foreseen cap on single or annual investments via equity or lending crowdfunding. For retail investors, instead, that is all individuals with an income below €100,000, CMVM sets an investment cap of €3,000 per offering and a total of €10,000 per 12-month period.
According to the proposed regulatory framework, companies raising equity or debt capital via online investing cannot raise more than €1 million in a given year, unless the offer is targeting only professional investors, in which case the limit is moved up to €5 million.
With regards to platforms, they have to be registered with CMVM, as the approved law already indicated, and in addition, the new rules require them to have a minimum capital of €50,000 or alternatively a liability insurance covering for that amount. Furthermore portals have to make available various information on the issuers in order to comply with transparency and anti-money laundering requirements.
The proposed rules for Portuguese online investing are more or less in line with those adopted by neighboring Spain, and for some aspects similar to other cases in the EU. However, the European market still remains a fragmented one, with different national legal frameworks for crowdfunding, which makes it difficult and expensive for online investing portals to operate in more than one country.
Nevertheless, the action of local regulators is a way to mitigate the risks associated with online investing and also to legitimate the growing sector. With time, it is likely adjustments will be made also to favor more cross-border activity.
Ana Laranjeiro (2015). Crowdfunding: CMVM propõe limite ao investimento a três mil euros por oferta. Jornal de Negocios
Crowdfunding: CMVM impõe limite de um milhões de euros ao financiamento. Sapotek (2015).
CMVM propõe limites de investimento no 'crowdfunding'. cmjornal.xl.pt (2015)
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 and she works also for the European Crowdfunding Network.