Issue 8 2023 – Crowdfunding Service Providers: updated Questions and Answers published (3rd Edition July 2023)

The Central Bank has recently updated its Questions and Answers document for crowdfunding service providers, specifically the 3rd Edition from July 2023. This document serves as a valuable resource for industry professionals seeking information and guidance regarding the implementation of Regulation (EU) 2020/1503 on European crowdfunding service providers for business.
Within this latest edition, there are several key additions. First, it includes Questions and Answers related to the supporting evidence required concerning prudential requirements under Article 11 of the ESCPR. Second, it addresses supporting evidence requirements concerning Section 5 of the Individual Questionnaire in a Pre-Controlled Function application. Lastly, it provides insights into the regulatory reporting requirements once a crowdfunding service provider obtains authorization.
This FAQ document is accessible on the Central Bank of Ireland website and may undergo updates as necessary. Therefore, it’s advisable for industry professionals to periodically check the Central Bank’s website for any significant developments or alterations in the responses to queries covered in the Questions & Answers document.
Additionally, it’s clarified in the document that „The Regulation“ refers to Regulation (EU) 2020/1503, which outlines the framework for European crowdfunding service providers for business. It’s emphasized that this Questions and Answers document does not possess a legally binding status, and for matters requiring legal interpretation of the Crowdfunding Regulations and/or the Regulation, interested parties are advised to consult their legal advisors.
Furthermore, the ESMA periodically publishes its own Questions and Answers on the Regulation, which can be found on the ESMA website at www.esma.europa.eu. This signifies that there are additional resources available for industry professionals seeking comprehensive guidance on European crowdfunding service provider regulations.
Below are all questions in their original state, together with a short summary of the key points of the corresponding answer (newly added questions by the present July 2023 update, or the last update in November 2022, are marked accordingly):
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##### 1. Who is the National Competent Authority in Ireland in respect of the Regulation?
The Central Bank of Ireland has been designated as the competent authority in Ireland responsible for the authorization and oversight of crowdfunding service providers in accordance with Regulation 3 of the European Union (Crowdfunding) Regulations 2021 (S.I. No. 702 of 2021).
##### 2. What are admitted instruments for Crowdfunding Purposes, and are they permissible under Irish law?
Admitted instruments for crowdfunding purposes are shares of a private limited liability company that are not subject to restrictions preventing their transfer. Whether a share in an Irish company qualifies as an admitted instrument for crowdfunding purposes depends on the specific case and legal advice should be sought.
##### 3. Are crowdfunding service providers required to notify the Central Bank of key investment information sheets at least seven working days before making it available to prospective investors?
While the Central Bank may require ex ante notification of key investment information sheets (KIIS), it currently does not require such notifications for all KIIS. However, it reserves the right to request notifications at its discretion.
##### 4. Are crowdfunding service providers required to provide a regulatory disclosure statement and, if so, what should it include?
Crowdfunding service providers must include a regulatory disclosure statement in all advertisements. The statement should either indicate that the provider is regulated by the Central Bank of Ireland or specify the competent authority and Member State under which it is regulated.
##### 5. Have the transitional arrangements provided for under Article 48 of the Regulation been extended by the European Commission and, if so, what does this mean for crowdfunding service providers? (Added November 2022)
The transitional arrangements under Article 48 of the Regulation have been extended by 12 months, allowing existing crowdfunding service providers to continue operating within the scope of the Regulation until 10 November 2023 or until they are authorized. Crowdfunding service providers should engage with the Central Bank and submit an application for authorization by 10 May 2023.
##### 6. Are crowdfunding service providers currently required to comply with the Addendum to the Consumer Protection Code 2012 published on 13 January 2022 (which applies a number of provisions of the Consumer Protection Code 2012) (the Code) to advertising by crowdfunding service providers? (Added November 2022)
Crowdfunding service providers operating under the transitional period permitted by Article 48 of the Regulation are not subject to the Addendum to the Consumer Protection Code 2012. However, they should use this time to prepare for compliance with the Code and the Regulation once authorized.
##### 7. When submitting an application for authorisation, are crowdfunding service providers required to provide supporting evidence when they propose to meet the prudential requirements under Article 11 of the Regulation through an insurance policy? (Added July 2023)
The Central Bank requires crowdfunding service providers to submit a confirmation letter from their insurance company, demonstrating authorization, and compliance with specific regulatory articles. They must also provide a copy of the insurance policy referencing these regulatory requirements.
##### 8. What supporting evidence will the Central Bank consider in respect of Section 5 (reputational questions) of an Individual Questionnaire (IQ) in relation to the Pre-Controlled Function (PCF) application? (Added July 2023)
The Central Bank will consider official certificates issued by public service bodies or objectively reliable sources of information as supporting evidence for Section 5 of the Individual Questionnaire (IQ) regarding reputational questions in a Pre-Controlled Function (PCF) application.
##### 9. What regulatory reporting requirements are placed on crowdfunding service providers once authorized by the Central Bank? (Added July 2023)
Crowdfunding service providers may be required to provide any information needed by the Central Bank for its functions, including monitoring compliance with financial services legislation. Additionally, they are required to annually provide a confidential list of projects funded through their crowdfunding platform.