The phenomenon of crowdfunding has become an indispensable way of raising capital on the financial markets. Crowdfunding is enjoying unbroken popularity, particularly in the area of financing real estate projects. Put simply, this involves a large group of people raising money, often small amounts, for projects or companies via an internet platform. It is not only the actual fundraising that is of interest to companies seeking financing through crowdfunding, but also the media attention that individual projects that are implemented with the help of crowdfunding repeatedly attract. In Germany, crowdfunding is regulated at national level in the German Investment Act (VermAnlG). At the European level, this has been regulated by the European Crowdfunding Service Provider Regulation (ECSPR) (EU) 2020/1503 since 10th of November 2021. But when is which regulatory regime applicable and which products may be distributed and how?

In Principle the ECSPR Takes Precedence Over the VermAnlG

Within the VermAnlG, the German legislator has established the priority of the ECSPR for offers that do not exceed an equivalent value of EUR 5,000,000, calculated over 12 months. The ECSPR therefore always takes precedence when an offer of products covered by the Regulation is made via a crowdfunding platform authorized under the ECSPR. These products include, in particular, financial products that are predominantly not classified as asset investments. In particular, these are securities and non-subordinated loans. Subordinated loans in particular, which are popular in Germany, lack the unconditionality of the repayment claim required by the ECSPR and are therefore not suitable products for distribution under the ECSPR. This is certainly not the case for loans with a qualified subordination. These subordinated loans therefore continue to fall under the scope of application of the VermAnlG if they are to be issued by way of crowdfunding in Germany and therefore also benefit from the simplifications that the VermAnlG provides for such issues.

What Documentation Requirements Must Be Met for the Issuance of a Crowdfunding Product?

In terms of content, the ECSPR obliges the crowdfunding service provider, i.e. the operator of the internet platform through which the issue is carried out, to offer the regulated crowdfunding services only on the basis of an authorization in accordance with the ECSPR and stipulates that they are subject to ongoing supervision by BaFin. In contrast to the national provisions of the VermAnlG, the regulation therefore does not apply in relation to the issuer or provider with respect to the filing of transparency documents, but rather to the operator of the internet platform. As an authorized crowdfunding service provider under the ECSPR, the latter is obliged to check the necessary documentation for each such offering, the so-called key investment information sheet (KIIS), for completeness, accuracy and clarity and to report any deficiencies to the promoter, who is responsible for preparing the KIIS, which is a maximum of 6 DIN A4 pages long, and to work towards correcting it. In contrast, when issuing a subordinated loan in accordance with the VermAnlG, for example, the issuer or provider of such a funding must prepare an investment information sheet no longer than 3 DIN A4 pages and file it with BaFin. With the appropriate authorization, it is possible to provide both crowdfunding under ECSPR as a crowdfunding service provider and as an operator of an Internet service platform within the meaning of the VermAnlG. Of course, it is not possible to offer crowdfunding issued in accordance with the VermAnlG in other European countries. However, this possibility exists under certain conditions for crowdfunding issued under ECSPR.

Attorney Dr. Konrad Uhink



The lawyer responsible for providing advice on crowdfunding under ECSPR as well as under the Asset Investment Act in our law firm is attorney Dr. Konrad Uhink.