Name
Global FinTech Guide
Country _ Name
Portugal
SectionTitle
Crowdfunding/crowdinvesting/crowdlending
Body
FinTechs belonging to this category operate crowdfunding, crowdinvesting and crowdlending platforms on which money is raised to invest in various projects, mainly start-up companies and real estate projects.

Crowdfunding is not a legal term, but often used as the general term for donation-based crowdfunding (the investor donates the money to the project), reward-based crowdfunding (the investor receives an often symbolic consideration for his investment), equity-based crowdfunding (crowdinvesting: the investor participates in the profits of the financed project or acquires shares or debt instruments) or lending-based crowdfunding (crowdlending: the investor is reimbursed at the end of the project with or without interest).

Introduction

Attitude of the country towards crowdfunding, crowdinvesting and crowdlending platforms

In Portugal, the market is still in development, as there are only four local registered platforms. However, these platforms have been expanding their reach at the European level and, inversely, European providers have increasingly been establishing their operations in Portugal under EU rules for cross-border activities.

Legal affairs

Obligations and requirements to provide crowdfunding, crowdinvesting and crowdlending platforms described above

The legal framework for crowdfunding was introduced by Law 102/2015 of 24 August (Regime Jurídico do Financiamento Colaborativo, hereinafter "RJFC"), which entered into force on 1 October 2015 (Article 25 of the RJFC). The RJFC underwent its first amendment with Law 3/2018, of 9 February, which approved the sanctions regime applicable to crowdfunding, and the second with Decree-Law 102/2015, of 24 August, aligning the definition of crowdfunding with that of Regulation (EU) 2020/1503 and amending regulations of reward and donation-based crowdfunding as week as equity and lending-based crowdfunding. The RJFC is applicable to four models of crowdfunding: (1) crowdfunding by donation; (2) reward-based crowdfunding; (3) equity crowdfunding and (4) loan-based crowdfunding Financial-return crowdfunding (i.e., equity and loan-based crowdfunding) is also subject to Regulation 1/2016 (hereinafter Regulation 1/2016 CMVM), approved and published by the Portuguese Securities and Exchange Commission (hereinafter, the “CMVM”).

The activity of non-financial return crowdfunding platforms (donations and rewards) is dependent on the prior communication to the Directorate General for Economic Activities (Direção-Geral das Atividades Económicas, hereinafter “DGAE”) (Article 12(1) of the RJFC) on the intention to begin such activity, which is carried out through the communication procedures established in Ordinance 131/2018 of 10 May. The supervision, as well as the application of any sanctions for breaches of the regulation on non-financial return crowdfunding, is under the authority of Economic and Food Safety Authority (“ASAE”), pursuant to the provisions of Article 2(1) of Law 3/2018, of 9 February.

Under the applicable legislation, the activity of financial-return crowdfunding (equity and loan-based) is dependent on the prior registration of the crowdfunding service providers with the CMVM, with the purpose of ensuring “the control of the requirements for the exercise of the activity by crowdfunding platforms”. The Bank of Portugal must also provide an opinion prior to decision from the CMVM, if applicant is an entity subject to its supervisions. Crowdfunding service providers must satisfy one of the following prudential requirements set out in Article 2 of Regulation 1/2016 CMVM: (i) having a minimum share capital of € 50,000; (ii) valid civil liability insurance appropriate to the activity, or some other comparable guarantee against liability arising from professional negligence, covering losses in the minimum amount of € 1,000,000 per event or € 1,500,000 for all events occurring during one year; (iii) a combination of the prudential requirements mentioned before The registration is subject to a registration fee of € 1.000. The CMVM is the competent authority for the supervision of the platforms.

The KYC and other AML duties applicable to crowdfunding service providers are better detailed in the AML legislation, in relation to investors, in the case of financial-return crowdfunding, and to supporters, in the case of crowdfunding for non-financial returns.

Additional comments regarding the legal situation for crowdfunding, crowdinvesting and crowdlending platforms or what FinTech’s must be aware of in this business area

Under the RJFC, equity crowdfunding may involve a subscription offer in the primary market addressed to the public, via the internet, of (i) stakes in the share capital to be issued by the funded entities; or (ii) contractual arrangements entitling the funded companies to payments equivalent to a participation in capital (quasi capital) and, in consideration of such payments, entitling the investors to the beneficial ownership of a share in the funded entity; the assignment of dividends or profit sharing in relation to the revenues arising from the projects funded.

As regard to loan-based crowdfunding, the RJFC assumes the funding of the project owner through a debt instrument, entitling the investor vis-à-vis the beneficiary to the right of repayment and the remuneration of the investment through interest payments. The crowdfunding agreement might assume the form of a loan agreement of any type (namely, a civil loan agreement) or a financial debt instrument, mainly bonds or debt notes. The law does not prohibit agreements foreseeing conditional rights to interests (v.g. conditioned upon the existence of the funded project’s profits) or the subordination of the investor’s credits to other classes of creditors (subordinated loans).

Economic conditions

Market size for crowdfunding, crowdinvesting and crowdlending platforms and biggest companies in this business area

See our answer 1 above. No public data available. The major platforms, such as Raize and Goparity operate in the loan-based/invoice trading models. There is a growing market for platforms operation in the ESG / impact investment segment.

Additional comments regarding the economic situation for crowdfunding, crowdinvesting and crowdlending platforms or what FinTech’s must be aware of in this business area

Recent updates to the crowdfunding legal framework have facilitated cross-border activities from and to Portugal. The CMVM in particular has shown openness to issue the necessary authorization, pursuant to the platforms’ willingness to adapt their procedures in compliance with the law.

Authors

Close

Choose country