France’s crowdfunding regulation raises lending, investment caps

France’s crowdfunding regulation raises lending, investment caps


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The updates to the legislation regulating the crowdfunding sector in France have come into effect, raising the caps on crowdlending and equity crowdfunding, as well as introducing and specifying the terms of issuance of “minibons” – new business lending instruments.

France is the second largest crowdfunding market in Europe after the UK with €312 million lent in 2015 and is one of the earliest adopters of specific regulation of the sector.

According to the new directive, platforms registered as Conseil en Investissement Participatif (CIP, equity investment advisor) with France’s financial markets and securities regulator, the AMF, can allow projects to seek up to €2.5 million in equity funding. Until the beginning of November the cap was €1 million. The new regulation also allows expands the type of shares the equity crowdfunding platforms can issue. Now they can offer preferred shares, participatory notes and convertible bonds, in addition to the simple shares and plain vanilla bonds.

The crowdlending platforms who are registered as Intermédiaire en Financement Participatif (IFP, crowdlending intermediary) and are supervised by France’s financial services regulator APCR, have had their lender contribution cap lifted from €1000 per investor per project to €2 000 for an interest-bearing loan. The €4000 cap for interested-free loan is raised to €5000.

The new ordinance also regulates to issuance of the so-called “minibons” – a type of crowdfunding debt securities. They would allow companies to directly lend to businesses on crowdfunding platforms. The platforms who want to issue and trade in minibons must register with the AMF as CIP. The minibons can be bought by individuals, companies and investment funds.

According to the site CrowdfundingHub, citing data of the local Crowdfunding Association, in France operate around 140 crowdfunding and -lending platforms, with donation and reward based platforms accounting for around 80% of the entire turnover. Thanks to the clear regulation, France has many local thriving platforms.

The largest are KissKissBankBank and Ulule (reward based), Lendix, Unilend, Lendopolis and Lendosphere (P2P business lending), Anaxago and Wiseed (equity based platforms) and Prêt d’Union (P2P consumer lending). Among the international P2P lenders are present LendingClub, Indiegogo and Kickstarter.

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