The regulation of crowdfunding platforms—essentials
The regulation of crowdfunding platforms—essentials

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • The regulation of crowdfunding platforms—essentials
  • Scope of this Practice Note
  • Types of crowdfunding
  • Legal issues relevant to crowdfunding platforms
  • FCA review of crowdfunding
  • FCA Call for input and feedback statement
  • Consultation paper, dear CEO letter and policy statement
  • The investment model
  • Public offers
  • Regulated activities—share issues
  • More...

BREXIT: 11pm (GMT) on 31 December 2020 (‘IP completion day’) marked the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. Following IP completion day, key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see: Brexit and financial services: materials on the post-Brexit UK/EU regulatory regime.

Scope of this Practice Note

This Practice Note discusses the regulatory issues faced by crowdfunding platforms from a financial services perspective. It should be read in conjunction with the Financial Services and Markets Act 2000 (FSMA 2000), secondary legislation and regulatory rules and guidance, such as provisions in the Financial Conduct Authority (FCA) Handbook and the FCA’s webpage dealing with crowdfunding. This Practice Note also briefly discusses the initiatives taken at EU level in relation to the regulation of crowdfunding which is discussed further in Practice Note EU Regulation of crowdfunding—the ECSP Regulation and the MiFID II Amending Directive.

Crowdfunding (sometimes called 'crowd sourcing' or 'crowd financing') works on the premise that persons seeking funding, such as entrepreneurs, showcase projects or companies on an internet platform and members of the public provide funding through the platform. There is no limit to the amount of individual contribution but, unlike more established methods of fundraising, many

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