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This document does not waive the need to consult the original legislation published in the Diário da República official gazette

Legal framework for crowdfunding


Law no. 102/2015 of 24 August

 
 Legal framework for crowdfunding
(as amended by Law no. 3/2018 of 9 February) 
 
 
 
CHAPTER I
General provisions
 
Article 1
Purpose
This law defines the legal framework for crowdfunding.
 
 
Article 2
Crowdfunding
Crowdfunding is a type of funding of entities, or their activities and projects, by their registration on electronic platforms accessible over the internet, from which they raise tranches of the investment collected from one or more individual investors. 

 
Article 3
Crowdfunding arrangements
The crowdfunding arrangements are:
 
a) Donation-based crowdfunding, where the funded entity receives a donation in return for, or not, consideration of a non-monetary nature;
 
b) Reward-based crowdfunding, where the funded entity is obliged to provide the financed product or service in return for the funding obtained;
 
c) Equity crowdfunding, where the funded entity repays the funding obtained through a share of its share capital, dividend payments or profit sharing;
 
d) Loan-based crowdfunding, through which the funded entity pays interest on the financing obtained, at the rate defined at the time the funds are raised. 

 
 
CHAPTER II
Common provisions
 
Article 4
Ownership and registration 
1. Any legal person or individual establishment with limited liability may own a crowdfunding platform.
 
2. Platforms that pursue more than one type of crowdfunding arrangement shall be bound by the specific requirements applicable to each arrangement.
 
 
Article 5
Duties of crowdfunding platforms 
1. The duties of the management entities of the electronic platforms are:
 
a) Ensure investors have access to information on the products placed through their internet websites or portals; 
b) Ensure confidentiality of the information received from investors as well as the information received from the beneficiaries of the investment which is not for public disclosure under the framework of the information obligations pursuant to this law; 
c) Ensure compliance with the rules of this law and other applicable rules on the prevention of conflicts of interest, in particular regarding the prohibition of the members of the governing bodies and employees having financial interests in the offerings made available by the platform.
 
2. Crowdfunding platforms cannot:
 
a) Provide advice or recommendations on the investments to be made through their internet websites or portals;
b) Compensate their directors or employees for the offerings or volume of sales of the products made available or referred to on their portals; 
c) Manage investment funds or own securities.  

 
Article 6
Registering on a platform
1. A funding beneficiary registers on a particular crowdfunding platform by means of a written contract, which is made available in a dematerialised manner through the platform. That contract shall include the identification of the parties, the forms of crowdfunding to be used, the identification of the project or activity to be financed, the target amount and duration of the campaign to raise funds, as well as the financial instruments to be used to raise the funds.
 
2. Non-compliance with the stated conditions regarding the core elements of the offering, referred to in the preceding paragraph, is grounds for termination of the contract by either party, notwithstanding the liability to third party investors, acting in good faith, of the defaulting party which gave rise to the termination of the relationship.
 
Article 7
Beneficiaries of crowdfunding platforms
1. Any natural or legal person, national or foreign, interested in raising funds for their activities or projects through this form of funding may use crowdfunding platforms.
 
2. Crowdfunding beneficiaries shall report the following data, and ensure it is kept updated, to the platforms with which they enter into a contractual relationship, for the purpose of conveying information to potential investors: their identification, legal nature, contacts, registered office or domicile, and the identity of those holding positions on the management body, where applicable.
 
Article 8
Knowledge of the conditions
Investors shall state, when subscribing, that they are aware of the business conditions, in particular the investment risk and the relationships they establish with the crowdfunding platform and with the beneficiaries of the investment.
 
Article 9
Amendment of the offering conditions
1. When the indicated amounts are not raised within the established deadline, the transactions already entered into shall be considered null and void, and the investment beneficiaries shall refund the amounts they have received when such funds have already been transferred, without prejudice to the provisions of the following paragraph.
 
2. If the offering expressly provides for the possibility of amending the amounts and duration, and this fact has initially been communicated to investors, platforms shall notify all investors of the subsequent change in the subscription conditions, indicating the new maximum amount to be raised.
 
3. Only one extension of the duration or one change of the amount is allowed for each offering. 
 
4. In the case of amendments to the offering, a time limit shall be established for the cancellation of subscriptions already registered.
 
Article 10
Law applying to the underlying legal relationship
1. The legal frameworks concerning the types of contracts concluded through crowdfunding platforms, including donation, purchase and sale, provision of services, issue and trading of securities and loans, as well as the provisions on intellectual property protection, where relevant, apply in full to the legal relationships underlying crowdfunding, in particular the relationship between the funding beneficiaries and investors.
 
2. Equity-based or loan-based crowdfunding can only involve the issue of financial instruments if carried out by a financial intermediary, in accordance with legislation applying to the financial instruments market.
 
3. The provisions of this article do not affect the performance of the supervisory activities specific to Banco de Portugal and other regulators, whenever the Parties' activities imply the application of the respective supervisory and regulatory legal frameworks.
 
Article 11
Prevention of conflicts of interest
1. Platforms shall be organised in such a way to identify possible conflicts of interest and act in order to prevent or minimise the risk of their occurrence. The platforms' owners, managers, employees or other service providers directly involved in the crowdfunding activity shall not have interests conflicting with the beneficiaries or investors.
 
2. In a conflict of interest, platforms shall act to ensure transparent and equitable treatment of the investors and beneficiaries.

 
 
CHAPTER III
Crowdfunding conditions
 
SECTION I
Donation or reward-based crowdfunding
 
Article 12
Ownership and registration
1. Donation or reward-based crowdfunding platforms shall notify in advance the Directorate-General for Economic Activities of the start of their operations.
 
2. The prior notification procedure is conducted by dematerialised means, irrespective of the payment of administrative fees, and it is defined in an ordinance issued by the member of the Government responsible for the economy, which shall identify the data to be reported and approve the simplified forms for transmission over the internet.
 
Article 13
Characteristics of the offering
1. Each offering made available through donation or reward-based crowdfunding platforms is subject to a fundraising ceiling that may not exceed 10 (ten) times the total value of the activity to be financed.
 
2. Each offering can only be made available on a single crowdfunding platform.
 
Article 14
Information concerning the offering
1. The beneficiaries of crowdfunding shall report the following to the platforms, as information for investors, in relation to each offering:
 
a) The description of the activity or product to be financed and the purpose of the funds to be raised;
b) The amount and duration of the fundraising campaign;
c) The price of each unit to be subscribed to or how that price is to be established.
 
2. The information provided to investors shall be complete, true, current, clear, objective and lawful, enabling the recipients to make reasoned judgments on the offering and the beneficiary of the investment.

 
SECTION II
Equity or loan-based crowdfunding
 
Article 15
Ownership and registration
1. The management entities of the electronic platforms shall first register with the Portuguese Securities Market Commission (CMVM) before engaging in the equity or loan-based crowdfunding intermediation activity. The CMVM is responsible for the regulation, supervision and monitoring as well as for the investigation of any infringements, conducting proceedings and levying any fines and additional penalties in connection with this activity.
 
2. The purpose of registering with the CMVM is to ensure control of the requirements for performing the activity by the crowdfunding platforms and to allow the supervision to be organised, as well as to control the management good repute of the platform operators.
 
3. The registration procedure is defined in a Regulation by the CMVM, which shall establish the requirements for engaging in the activity and grounds for refusal based, inter alia, on proving the good repute of the platform owners, deadlines, the framework for the suspension and cancellation of the registration and other formalities. It shall favour electronic data transfers.
 
 
Article 16
Duties of the platforms
The duties of the management entities of the electronic platforms are:
 
a) Take the necessary measures to prevent fraud, as provided for in this law and defined by the regulations adopted by the CMVM;
b) Comply with the other reporting, organisation and conduct obligations arising from the regulations adopted by the CMVM.
 
Article 17
Reporting obligations
1. The beneficiaries of equity or loan-based crowdfunding shall also report the following to the platforms, for the purposes of providing information to investors and to the CMVM:
 
a) All relevant financial information about the beneficiary entity, about compliance with their tax and contributory obligations and about their capital structure;
b) All relevant information about the projects to be financed, including the associated risks, appropriate and proportional to the amount of funding to be raised, in order to ensure the investment decision is suitably informed.
 
2. The beneficiaries of equity or loan-based crowdfunding shall also send their annual activity reports to the CMVM and to the platforms with which they have a relationship pursuant to this law, so that these reports may be made available to investors.
 
3. The CMVM may establish by regulation other information to be conveyed for the purposes set forth in the preceding paragraphs.
 
Article 18
Characteristics of the offering
1. Each offering made available through crowdfunding platforms is subject to a fundraising ceiling, which does not have to match the overall value of the activity to be financed.
 
2. The CMVM defines, by regulation, the ceiling for the equity and loan-based crowdfunding referred to in the previous paragraph.
 
3. Each offering can only be made available on a single crowdfunding platform.
 
Article 19
Information concerning the offering
1. The beneficiaries of crowdfunding shall report the following in a standardised format to the platforms in relation to each offering, as information for investors.
to be defined by CMVM Regulation:
 
a) The description of the activity or product to be financed and the purpose of the funds to be raised;
b) The amount and duration of the fundraising campaign;
c) The price of each unit to be subscribed to or how that price is to be established;
d) Other data elements defined in the CMVM regulation in relation to equity or loan-based crowdfunding.
 
2. The CMVM defines by regulation the extent of the information to be provided under paragraph 1(b). It shall take into account the amount to be raised when defining the data elements to be requested from the crowdfunding beneficiaries.
 
3. The information provided to investors by the crowdfunding beneficiary shall be complete, true, current, clear, objective and lawful, enabling the recipients to make reasoned judgments on the offering and the beneficiary of the investment.
 
Article 20
Investment limits
1. Investors are subject to an annual ceiling on investment in products acquired by means of equity or loan-based crowdfunding.
 
2. The CMVM defines by regulation the investment ceilings referred to in the preceding paragraph, in order to ensure:
 
a) The existence of an annual ceiling per investor, for each offering;
b) The existence of an overall annual ceiling per investor in relation to the total of subscribed offerings.
 
3. The definition of the ceilings by the CMVM is based on the setting of different ceiling values according to investors' annual income. It may also define different investment ceilings according to the profile of investors, taking into account, inter alia, their experience and qualification.
 
4. Each investor shall state when subscribing an offering, for the purposes of complying with the ceiling referred to in paragraph 3, the total amount already invested in the acquisition of financial products through offerings on crowdfunding platforms, as well as their income bracket.

5. The terms for the implementation of investments, namely as regards the recording of transfers and relations with banking institutions, are regulated by the CMVM.
 
 
Article 21
Legal framework for equity or loan-based financing
1. Crowdfunding platforms that provide the equity or loan-based arrangements shall adopt a written policy on conflicts of interest appropriate to their size and organisation, and to the nature, size and complexity of their activities. 
 
2. The policy on conflicts of interest shall, in particular:
 
a) Identify the circumstances that comprise or may give rise to a conflict of interest;
b) Specify the procedures to be followed and the measures to be taken, in order to manage those conflicts;
c) Maintain and regularly update records of the activities that have generated conflicts of interest that pose a risk of affecting the interests of one or more entities holding crowdfunding relationships with the platform.
 
3. The platforms referred to in paragraph 1 shall not hold customers' funds or financial instruments and they are subject to the other duties of prevention of conflicts of interest set out in a CMVM regulation.

 
 
CHAPTER IV
Final and transitional provisions
 
Article 22
Sanctions framework
1. The administrative infraction and penal frameworks applying to breaches of the provisions of this law, in particular regarding the undertaking of the crowdfunding activity without being registered in the CMVM, non-compliance with reporting obligations, breach of professional secrecy and breach of the rules on conflicts of interest, shall be defined in a separate legislative instrument.
 
2. The provisions of the preceding paragraph shall not preclude the applicability of sanction frameworks that are generally applicable, in particular those provided for in the Securities Code.
 
Article 23
Regulation
1. The provisions of articles 369 et seq. of the Securities Code apply to regulations to be issued by the CMVM.
 
2. The CMVM adopts, within 90 days of the publication of this law, the regulatory standards necessary for its entry into force. 
 
Article 24
Safeguarding specific cases
The entry into force of this law does not preclude the legal relationships of crowdfunding validly established prior to its entry into force. 
 
Article 25
Entry into force
This law enters into force on the first day of the second month following its publication, with the exception of the provisions concerning equity or loan-based crowdfunding, which shall enter into force at the time of the entry into force of the regulatory standards referred to in Article 23.
 
Adopted on 3 July 2015.
The President of the Portuguese Parliament, Maria da Assunção A. Esteves.
Promulgated on 14 August 2015.
For publication.
The President of the Portuguese Republic, ANIBAL CAVACO SILVA.
Countersigned on 17 August 2015.
On behalf of the Prime Minister, Paulo Sacadura Cabral Portas,
Deputy Prime Minister.