Last week the German Government approved a regulation to protect small investors investing through online securities crowdfunding portals. The law 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.
The regulation on online investing was on the table of Angela Merkel for a while. The first draft received many criticisms from the German crowdfunding ecosystem. In fact, the proposed rules included points which created unnecessary obstacles to online investing. For example, there was a rule that investors have to send an investment information sheet via mail and sign it manually.
The approved version of the Small Investors Protection Bill includes a reviewed Crowdinvesting Exemption, which leaves out previous points regarding mailing of an investment information sheet and signature. It also increases the cap under which fundraisers do not 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 that their assets or income are at a sufficient level to bear the risk of loss. Otherwise, it remains at €1,000.
Soon we will see if this crowdinvesting regulation has struck the right balance and will help digital investing to flourish in the country.
Nienaber, M. (2015). Germany approves crowdfunding rules to protect small investors. Reuters. 23 April.
This is an edited version of a post originally posted at http://www.crowdvalley.com/news/germany-adopts-regulation-for-online-investing by Irene Tordera. You are free to re-edit and repost this in your own blog or other use under Creative Commons Attribution 3.0 License terms by giving credit with a link to www.startupcommons.org and the original post. Photo credit: Got Credit, http://www.gotcredit.com/. The photo was originally published on Flickr. It has been used to illustrate this text under Creative Commons Attribution 2.0 License terms. No changes have been made.
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