Key Investment Information Sheet (KIIS)

Key Investment Information Sheet (KIIS) According to the ECSP Regulation

In the European Union, companies can use crowdfunding platforms to finance smaller projects with capital requirements of not more than EUR 5 million. Crowdfunding platforms must be operated by a crowdfunding service provider licensed under the ECSP Regulation, which are subject to comprehensive regulatory obligations as part of their business activities. According to the ECSP Regulation, the companies as project promoters must prepare a key investment information sheet (KIIS) for their project, which must not be longer than six DIN-A-4 pages. The KIIS serves to inform potential investors in as much detail as possible prior to investing in a crowdfunding project of a promoter. The ECSP Regulation does distinguish between sophisticated and non-sophisticated investors and imposes stricter investor protection obligations on the crowdfunding service provider for the latter. However, the key investment information sheet must be prepared by the project promoter for each project. Thus, the KIIS must be prepared both in the case of crowdfunding accessible only to sophisticated investors and in the case of crowdfunding for non-sophisticated investors.

Creation and Publication of an KIIS According to the ECSP Regulation

A key investment information sheet under the ECSP Regulation must be prepared by any crowdfunding entity that wishes to meet its funding needs through a crowdfunding platform operated by a crowdfunding service provider authorized under the ECSP Regulation. Investors must subsequently be provided with the KIIS by the appointed crowdfunding service provider. The KIIS does not have to be approved for publication by BaFin or any other authority prior to being made available to investors. According to the national civil law applicable in each individual case, at least the project promoter as issuer of the investment product is liable for any incorrect or missing information in the KIIS, which is why it should be prepared with the utmost care and accompanied by a qualified lawyer or a law firm experienced in the field of the ECSP Regulation. The key investment information sheet must be drafted in the language that is the official language or at least the language accepted by the competent authorities in the target market of the crowdfunding. If participation in the crowdfunding is also to be open to investors from other EU member states, the key investment information sheet must be translated.

Content of a KIIS to be Prepared by the Project Promoter

The ECSP regulation specifically sets out the minimum information that must be included in an KIIS. Accordingly, information on the crowdfunding service provider and the crowdfunding project, details on the crowdfunding procedure at the crowdfunding service provider, risk factors and details on the investment products offered as well as on investor rights must be presented in the KIIS. In addition, the key investment information sheet must also provide information on costs and fees as well as access to further information and available legal remedies. Depending on the specific product, further mandatory information may be required. In this respect, it is possible under the ECSP Regulation to structure crowdfundings via the issuance of transferable securities or via the acceptance of investor loans. Finally, the key investment information sheet must contain a disclaimer and a risk warning, whereby both the wording and the specific placement in the KIIS are specified by the ECSP Regulation.

The competent lawyer for questions concerning the preparation of a KIIS according to the ECSP regulation in our law firm is Attorney Dr. Konrad Uhink.