On 10 November 2021, the European Securities and Markets Authority ("ESMA") published a final report on technical standards (the "Final Report") under Regulation (EU) 2020/1503, published in the Official Journal of the European Union on 20 October 2020 (the "Crowdfunding Regulation"). This marks an important milestone towards harmonising the new European crowdfunding regime.
Firstly, it is important to remember that the Crowdfunding Regulation has required ESMA to develop 8 draft regulatory technical standards ("RTS") and 4 draft implementing technical standards ("ITS") on a variety of topics (1). For this reason, on 26 February 2021, ESMA published a consultation paper to seek stakeholders’ views on ESMA’s proposals for 7 RTSs and 2 ITSs (2).
The Final Report covers all 12 topics required by the Crowdfunding Regulation, including 4 with a legal deadline of May 2022. As the Crowdfunding Regulation entered into force on 10 November 2021, ESMA decided to develop all the technical standards simultaneously in order to provide indicative guidance to competent authorities and stakeholders.
The 12 technical standards in the Final Report cover all investor protection aspects under the Crowdfunding Regulation, namely:
(i) complaints handling;
(ii) conflict of interest;
(iii) business continuity plan;
(iv) authorisation;
(v) information on default rate;
(vi) entry knowledge test and simulation of the ability to bear loss;
(vii) key investment information sheet;
(viii) cooperation between competent authorities;
(ix) reporting;
(x) notification to ESMA of national provisions concerning marketing requirements;
(xi) cooperation between competent authorities; and
(xii) cooperation between competent authorities and ESMA.
The Final Report collected all the feedback received during the consultation phase.
[1] Most of these RTSs and ITSs should have been submitted by ESMA to the European Commission by 10 November 2021. The remaining 4 technical standards mandates (2 RTS and 2 ITS) should have been delivered to the Commission by 10 May 2022.
[2] In addition, ESMA has developed 1 RTS and 2 ITS for which ESMA considered not to conduct a public consultation, as this would have been highly disproportionate in relation to the scope and impact of these 3 technical standards.
Authors: Luca Lo Po' and Claudio Saba
