Name
Global FinTech Guide
Country _ Name
Ireland
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 defined financial service, but generally used to describe 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

Ireland has a very progressive and open attitude to the development of crowdfunding. It identifies this as a growing source of alternative funding for firms and industries that rely on small investments.

In March 2018, the European Commission published its “FinTech action plan: For a more competitive and innovative European financial sector”.

This includes EU framework on crowdfunding which consists of Regulation (EU) 2020/1503 (the “Regulation”) together with Directive (EU) 202004/1504 (the “MiFID II Amending Directive”).

The above legislation applies to two key types of crowdfunding: investment-based crowdfunding and peer-to-peer lending.

The Crowdfunding Regulation provides uniform requirements for the following:

  1. Provision of crowdfunding services.
  2. Organisation, authorisation, and supervision of Crowdfunding Services Providers ("CSPs").
  3. Operation of crowdfunding platforms.
  4. A requirement for transparency in marketing communications when providing crowdfunding services in the EU.

The Crowdfunding Regulation's scope is limited as follows:

  1. Project owners have some obligations under the new regime but are not required to be authorised by the Central Bank.
  2. Companies who seek financing or investment via the crowdfunding platform are limited to raising €5 million within a 12-month period per project owner; offers exceeding €5 million fall under the scope of MiFID II and / or the Prospectus Regulation.

The Central Bank of Ireland has been designated the competent authority for crowdfunding regulation in Ireland. On the 13th of January 2022, the Central Bank of Ireland announced that a number of the Consumer Protection Code 2012 provisions will now apply to advertising by crowdfunding service providers in Ireland. This is to ensure that investors are appropriately protected and well informed as to the potential risks.

Legal affairs

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

A CSP that facilitates either investment-based crowdfunding or peer-to-peer business lending via its platform will need to be authorised by The Central Bank of Ireland. 

An application for authorisation by the Central Bank will involve the following steps:

  1. A preliminary meeting with Central Bank to discuss the proposed application.
  2. Submission of an application form (and Individual Questionnaires).
  3. The Central Bank will acknowledge receipt of the application within 10 working days and assess the application for completeness within 25 working days.
  4. Once the application has been deemed complete, the Central Bank will then assess it.

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