Equity crowdfunding platforms: obtaining and maintaining PSFP approval

Since 10 November 2023, all equity crowdfunding platforms operating in the European Union have had to be authorised to provide equity crowdfunding services (PSFP). The former status of participatory investment advisor (CIP) and participatory finance intermediary (IFP) has been absorbed by this single regime, resulting from the European ECSP Regulation. The assistance of a lawyer specialising in banking and financial law has become essential in navigating this new regulatory framework.

This change has very concrete consequences. Authorisation is granted by the AMF after receiving the approval of the Autorité de contrôle prudentiel et de résolution (ACPR). The application must include guarantees of governance, capital adequacy, management of conflicts of interest and compliance with anti-money laundering requirements. In practice, it takes two to four months to compile the application and a further three to six months for the AMF to examine it.

Regulation (EU) 2020/1503 of 7 October 2020

The ECSP Regulation harmonises the legal framework for participatory financing throughout the European Union. It imposes the single status of PSFP for any platform facilitating the granting of loans or the subscription of securities and admitted instruments, within the limit of 5 million per project over 12 months. Above this threshold, a prospectus is required.

Our firm handles

  • Audit of the compliance of your business with the ECSP Regulation and the Monetary and Financial Code
  • Preparing and submitting the PSFP authorisation application to the AMF
  • Drafting regulatory documents: general terms and conditions, conflicts of interest management policy, AML/CFT arrangements, etc.
  • The drafting of Key Investment Information Sheets (KIS) in compliance with Article 23 of the Regulation
  • Regulatory monitoring and ongoing adaptation to changes in the European and French frameworks
  • Defence before the AMF Enforcement Committee in disciplinary proceedings

PSFP accreditation process

1

Audit and choice of status

2

Preparing your file

3

AMF filing

4

Training (3-6 months)

5

EU accreditation and passport

Project owners: structuring your crowdfunding campaign

You are launching a fundraising campaign via a participative financing platform. Before publishing your campaign, a number of legal questions need to be answered: what form of financing should you choose? What information should you provide to investors? How should you structure the equity crowdfunding operation so that it complies with French law and European regulations? Your lawyer can help you at every stage.

The challenges vary depending on the type of crowdfunding. In real estate crowdfunding, the promoter needs to plan ahead for the structuring of the project company, the guarantees offered to investors and the treatment of directors' guarantees. In crowdlending, the terms of the loan (interest rate, term, guarantees) must comply with regulatory ceilings. In equity crowdfunding, the relationship with investors over several years depends on the drafting of the partnership agreement and the exit clauses.

Shape Mechanism Required status Authority
Donation (with or without consideration) Contribution without financial return IFP ACPR
Loans (crowdlending) Interest-bearing or non-interest-bearing loans PSFP or IFP AMF / ACPR
Investment (equity / bonds) Subscription of financial securities PSFP AMF

Our firm handles

  • Advice on choosing the right form of equity crowdfunding for your project
  • The legal structure of the operation (project company, shareholders' agreement, issue conditions)
  • Validation of financial and legal information provided to contributors
  • Drafting and negotiating contracts with the platform
  • Post-campaign support: managing repayments, reporting to investors, dealing with difficulties, etc.

Depending on the configuration of your file, you can also consult our pages dedicated to bank guarantee, consumer credit and our hub credit law.

Investors: defending your rights in the event of difficulties

You have invested via a crowdfunding or participative financing platform and the project goes wrong. The property developer fails to repay on the due date. The company in which you have invested goes into receivership. The platform has disappeared or is no longer responding. These situations are becoming increasingly common in the property crowdfunding market, where several major failures have been reported since 2023.

Your remedies depend on the nature of the breach. If the platform has failed in its obligation to provide information - key information sheet incomplete, risks minimised, insufficient due diligence on the project promoter - it may be held civilly liable. If the project promoter has provided misleading information, the grounds for action are different. In all cases, responsiveness is crucial: some limitation periods are short and the assets of the defaulting debtor are rapidly depleted.

Protection for uninformed investors

The ECSP Regulation requires platforms to knowledge test before any investment and a 4-day cooling-off period during which the uninformed investor may withdraw from the contract free of charge (articles 21 and 22 of EU regulation 2020/1503). Failure to comply with these obligations gives rise to a right to compensation.

Our firm handles

  • Analysis of your situation and identification of responsibilities (platform, project leader, guarantor managers)
  • Formal notice and attempts at amicable resolution
  • Civil liability action against the platform for breach of its obligations to provide information and exercise due care
  • Declaration of debt in the event of the project promoter's insolvency proceedings
  • Reporting serious breaches to the regulatory authorities (AMF, ACPR)

Crowdfunding litigation: a fast-growing field

Litigation relating to participative financing is rapidly taking shape. Three main areas are emerging.

The first concerns responsibility of platforms. The key question is whether they are simply technical intermediaries or players exercising control over the offerings. In the context of digital platforms, the Court of Cassation recently ruled that an operator who exerts influence over the content of offers cannot claim to be a host and is liable under ordinary law. This reasoning can be applied to crowdfunding platforms, which select projects and promote them.

The second area focuses on penal sanctions. Carrying out the activity of intermediary in participative financing without registration is punishable by the penalties laid down for fraud (art. L573-15 of the Monetary and Financial Code). The number of prosecutions has increased since the end of the transitional period.

The third area concerns disputes between investors and project developers, This is particularly the case with property crowdfunding: late repayments, interest defaults, and directors' guarantees.

Our involvement in litigation

  • Holding platforms liable before civil and commercial courts
  • Defence before the AMF Enforcement Committee and the ACPR
  • Bringing a civil action for fraud or breach of trust
  • Representing creditors in insolvency proceedings against defaulting project promoters
  • Negotiation of transaction protocols between investors and platforms