Name
Global FinTech Guide
Country _ Name
Portugal
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

In Portugal, the market is still in development, as there are only six (6) registered platforms with financial-return models, mainly loan-based, and 13 with non-financial return models. Crowdfunding platforms are mainly local, without relevant cross-border activity.

Legal affairs

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

The legal framework for crowdfunding was introduced by Law 102/2015 of 24 August (Regime Jurídico do Financiamento Colaborativo, hereinafter RJFC), which entered into force on 1 October 2015 (Article 25 of the RJFC). The RJFC underwent its first amendment with Law 3/2018, of 9 February, which approved the sanctions regime applicable to crowdfunding. The RJFC is applicable to four (4) models of crowdfunding: (i) crowdfunding by donation; (ii) reward-based crowdfunding; (iii) equity crowdfunding; and (iv) loan-based crowdfunding.

Financial-return crowdfunding (i.e. equity and loan-based crowdfunding) is also subject to Regulation 1/2016 (hereinafter Regulation 1/2016 CMVM), approved and published by the Portuguese Securities and Exchange Commission (hereinafter, the CMVM).

The activity of non-financial return crowdfunding platforms (donations and rewards) is dependent on the prior communication to the Directorate General for Economic Activities (Direção-Geral das Atividades Económicas, hereinafter DGAE) (Article 12(1) of the RJFC) on the intention to begin such activity, which is carried out through the communication procedures established in Ordinance 131/2018 of 10 May. The supervision, as well as the application of any sanctions for breaches of the regulation on non-financial return crowdfunding, is under the authority of the Economic and Food Safety Authority (ASAE), pursuant to the provisions of Article 2(1) of Law 3/2018, of 9 February.

Under the applicable legislation, the activity of financial-return crowdfunding (equity and loan-based) is dependent on the prior registration of the crowdfunding service providers with the CMVM, with the purpose of ensuring “the control of the requirements for the exercise of the activity by crowdfunding platforms”. Crowdfunding service providers must satisfy one (1) of the following prudential requirements set out in Article 2 of Regulation 1/2016 CMVM: (i) having a minimum share capital of € 50,000; (ii) valid civil liability insurance appropriate to the activity, or some other comparable guarantee against liability arising from professional negligence, covering losses in the minimum amount of € 1,000,000 per event, or € 1,500,000 for all events occurring during one (1) year; or (iii) a combination of the prudential requirements mentioned before. The registration is subject to a registration fee of € 1.000, and the CMVM is
the competent authority for the supervision of the platforms.

The KYC and other AML duties applicable to crowdfunding service providers are better detailed in the AML legislation, in relation to investors, in the case of financial-return crowdfunding, and to supporters, in the case of crowdfunding for non-financial returns

Additional comments regarding the legal situation for crowdfunding, crowdinvesting and crowdlending platforms or what FinTech’s must be aware of in this business area

Under the RJFC, equity crowdfunding may involve a subscription offer in the primary market addressed to the public, via the internet, of (i) stakes in the share capital to be issued by the funded entities; or (ii) contractual arrangements entitling the funded companies to payments equivalent to a participation in capital (quasi capital) and, in consideration of such payments, entitling the investors to the beneficial ownership of a share in the funded entity; the assignment of dividends or profit sharing in relation to the revenues arising from the projects funded.

As regard to loan-based crowdfunding, the RJFC assumes the funding of the project owner through a debt instrument, entitling the investor vis-à-vis the beneficiary to the right of repayment and the remuneration of the investment through interest payments. The crowdfunding agreement might assume the form of a loan agreement of any type (namely, a civil loan agreement) or a financial debt instrument, mainly bonds or debt notes. The law does not prohibit agreements foreseeing conditional rights to interests (e.g. conditioned upon the existence of the funded project’s profits) or the subordination of the investor’s credits to other classes of creditors (subordinated loans).

Economic conditions

Market size for crowdfunding, crowdinvesting and crowdlending platforms and biggest companies in this business area

See our answer 1 above. No public data available. The major platforms – such as Raize and Goparity – operate in the loan-based/invoice trading models. In 2021, Raize established a cooperation agreement with an investment bank for the distribution of their products (Bank Best). There is a growing market for platforms operation in the ESG/impact investment segment.  

Additional comments regarding the economic situation for crowdfunding, crowdinvesting and crowdlending platforms or what FinTech’s must be aware of in this business area

As from 10 November 2021 – the date of its application within all the European Union – Regulation (EU) 2020/1503 of the European Parliament and of the Council, of 7 October 2020 (hereinafter ECSPR) caused a major impact on the Portuguese crowdfunding regime. Results from the transitional provisions above stated that after the application date of the ECSPR, crowdfunding service providers aimed to render services falling within the scope of the ECSPR may not be authorised under the RJFC and Regulation 1/2016 CMVM and the Portuguese regime will not be applicable to the activity of any crowdfunding service provider authorised after the application date of the Regulation. Crowdfunding service providers already authorised under the RJFC may continue to provide crowdfunding services included within the scope of the ECSPR, in accordance with the RJFC and Regulation 1/2016 CMVM, until 10 November 2022 or until they are granted an authorisation referred to in Article 12 of the ECSPR, whichever is sooner.

Nonetheless, the RJFC will continue to be applicable to all activities falling outside the scope of ECSPR, namely: (i) non-financial return crowdfunding; (ii) crowdfunding to finance project owners qualifying as consumers; (iii) distribution of stakes in companies not qualifying as transferable securities and equity-like agreements
; (iv) subordinated loans; (v) the activity of third-country platforms. 

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