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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
The FinTech Law introduced two specific entities authorised to carry out FinTech services; IFC and IFPE (jointly referred to as Financial Technology Institutions (“ITF”)). IFC are authorised to carry out crowdfunding activities and to serve as a marketplace for (a) peer-to-peer lending, with investors granting loans to recipients; (b) equity crowdfunding, with investor purchasing equity interests in recipient corporations; and (c) co-investments in assets and project funding, with investors and recipients entering into joint ventures through which the investor purchases an interest in a current or future asset or in the income or proceeds from a project offered by the recipient.
IFC platforms must include, among other requirements, (i) disclosure on selection of recipients and projects and the terms followed for the due diligence of such; (ii) risk profile of the investments; (iii) reporting on repayment of the loans; (iv) formalisation of the transactions; and (v) report to credit information companies.
Applicable law provides limits to the transactions that may be offered through the IFC’s platform. Such limits include a maximum amount that may be requested by recipients and amounts invested by a single investor.
Agreements entered into by IFC’s with users, both investors and recipients, must comply with financial consumer protection laws aimed to provide transparency and certainty to all parties involved. Fees and costs must also be clearly disclosed and approved by CNBV.
Legal affairs
Obligations and requirements to provide crowdfunding, crowdinvesting and crowdlending platforms described above
Crowdfunding platforms are specifically regulated in the Fintech Law and its secondary regulations. IFCs require an authorisation for the incorporation and operation. Requirements for a license are extensive and are similar to those of a banking institution. Filing requires documents related to (i) a complete disclosure of the ownership structure; (ii) corporate governance rules and procedures; (iii) an authorisation of the manuals and policies to be implemented by the entity; and (iv) a vetting of the technology infrastructure to be implemented by the entity.
Minimum capitalisation and financial reserves are required. Amounts depend on the type of transactions to be carried out by the IFC entity.
Currently, there are no governmental fees to be paid to incorporate an IFC, but this is likely to change in the near future.
Additional comments regarding the legal situation for crowdfunding, crowdinvesting and crowdlending platforms or what FinTech’s must be aware of in this business area
IFCs are gaining a reputation of competing with traditional banking institutions. This has generated a certain strain amongst a section of regulators, although the CNBV still views this as an advancement t