[ESMA35-42-1088 ] Q&A on the European crowdfunding service providers for business Regulation

ESMA has published an updated version of its Q&A on the ECSPR (Regulation (EU) 2020/1503). In this latest version, three new Q&As were added relating to General provisions as set out in Section 3, provisions of crowdfunding services and organisational and operational requirements as set out in Section 4 and Investor protection and marketing communications as set out in Section 5 of the document.
We would like to present the new entries:
—
#### General provisions
Question 3.17: How should NCAs apply Article 11(2)(c) of the ESCPR at the point of authorisation? How and to what extent can an insurance policy be combined with own funds?
Answer 3.17: NCAs should assess whether the suggested calculation of prudential safeguards (own funds and insurance policy) is correct and complies with the ECSPR and the Delegated Regulation 2022/2112. The ECSPR and the Delegated Regulation do not specify a preferred balance between own funds and insurance policy for prudential safeguards. NCAs should ensure that both own funds and insurance policy meet the requirements set out in the ECSPR and the Delegated Regulation.

#### Provisions of crowdfunding services and organisational and operational requirements
Question 4.3: How should placement without a firm commitment and reception and transmission of orders as referred to in point (ii) of point (a) of Article 2(1) of the ECSPR be understood in the context of the ECSPR?
Answer 4.3: Placement without a firm commitment and reception and transmission of orders should be understood in the context of the ECSPR as referring to Directive 2014/65 (MiFID II) and should be provided in relation to transferable securities and admitted instruments for crowdfunding purposes. The reception and transmission of client orders should be provided jointly with the placement of transferable securities or admitted instruments for crowdfunding purposes without a firm commitment.

#### Investor protection and marketing communications
Question 5.19: Can a crowdfunding service provider only accept sophisticated investors?
Answer 5.19: A crowdfunding service provider can only accept sophisticated investors, but it cannot prevent the provider from complying with all relevant provisions of the ECSPR and shall not be used as a way to circumvent the application of the consumer protection provisions of the ECSPR. The website of the crowdfunding platform should be very clear on this policy and avoid encouraging investors who would otherwise benefit from the protections awarded to non-sophisticated investors to apply to be treated as a sophisticated investor. The approval referred to in point (j) of Article 2(1) of the ECSPR should only be delivered to investors meeting very strictly the conditions set out in Annex II of the ECSPR.