Eurocrowd highlights concerns for future of German crowdfunding
Crowdfunding trade body Eurocrowd has highlighted concerns among its German members over the country’s draft implementation of the new EU crowdfunding rules.
Having made in-roads with the German government on its implementation plan for the European Crowdfunding Service Provider Regulation (ECSPR) in the Spring, Eurocrowd reports that the Summer’s draft Future Financing Act seems to have made a u-turn on previously softened liability rules.
“What’s at stake is the future of the German crowdfunding market, and this draft could have far-reaching implications,” the organisation has said in a blog this afternoon.
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It said currently under the relevant German law (Wertpapierhandelsgesetz) members of the administrative, management, or supervisory bodies of project sponsors or crowdfunding service providers can be held personally liable for ordinary negligence.
“This is a strict standard that departs from established norms in German prospectus liability law,” it said.
Conversely European laws, including the ECSPR and the Prospectus Regulation, provide for prospectus liability but don’t impose such stringent requirements on individuals.
The trade body noted that the European Commission has also raised informal questions about the German approach to crowdfunding liability.
Legal experts argue that extending liability to members of management bodies goes against traditional legal structures, while the distinction between negligence standards for different types of body members creates confusion.
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The latest government draft introduces changes to liability rules for ECSPR but falls short of the industry’s expectations after negotiations in the Spring.
“Liability is now limited to gross negligence, and a reversal of the burden of proof has been introduced. This change could strengthen investors’ positions, but it still leaves some questions regarding ordinary negligence,” the trade body said.
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