Call for ambitious reforms of the Prospectus Directive
European crowdfunding platforms, represented by the European Crowdfunding Network, the UK Crowdfunding Association, Financement Participatif France and Nederland Crowdfunding welcome the current EU debates in Brussels regarding the Prospectus Directive, aimed at making it easier for Small and Medium Sized Enterprises (SME) across Europe to raise finance.
The crowdfunding industry supports the goals of both the Capital Markets Union and the Digital Single Market. Crowdfunding enables anyone to invest in SMEs via their mobile, tablet and PC irrespectively of geographic location, so it is a key way of bringing together investors from across Europe by facilitating cross-border investment. To achieve this, the crowdfunding industry has called on the European Parliament and European Council to be more ambitious with the amendments to the Prospectus Regulation proposal proposed by the European Commission to ensure the EU framework enables regulated cross-border investment in crowdfunding, in line with best practices in consumer protection, and without the need for a Prospectus where appropriate. Most industry practitioners acknowledge that a modern day prospectus is designed for the legal advisers of professional investment firms not the needs of the retail investor. The focus is on disclosure but often at the expense of clarity and transparency of information. However, this should not be a barrier to investment. A prospectus is also designed for communicating the investment offers of large and complex businesses whereas the majority of crowdfunding investments involve straightforward corporate or project structures at a scale which is understandable to the retail investor. Crowdfunding platforms can present investment opportunities and risks in a responsible, transparent and accessible manner, taking special care of the information needs of retail investors. Investment Crowdfunding platforms provide proportionate investor protections to ensure people fully understand the risks of the investments and are given proper recourse if rules are not properly followed.