After starting the process in June, on November 30th, 2023, Recrowd received authorization from the Supervisory Authorities to operate, as defined by EU Regulation No. 2020/1503 on crowdfunding, also known as the European Crowdfunding Service Providers (ECSP) Regulation.
As of today, therefore, the number of Italian platforms authorized under the new regulation has risen to 12.
The purpose of the Regulation is to protect investors as much as possible, on the one hand by placing greater control over crowdfunding platforms, their operations, and the selection of projects, and on the other hand, to enhance this new form of investment.
Recrowd is Italy’s leading real estate lending crowdfunding platform with more than 110 million raised since its launch in 2019 for 169 funded projects.
In a post on its blog, Recrowd highlighted what the platform’s choices were when applying for approval.
Read more about the authorization of Recrowd under the new European crowdfunding rules and find the latest financial news of the day with the Born2Invest mobile app.
Sophisticated and unsophisticated investors
The ECSP Regulations call on crowdfunding platforms to classify investors as sophisticated and unsophisticated:
Individuals must enjoy at least two of the three criteria:
Possess gross personal income of at least €60,000 per tax year or a portfolio of financial instruments, including cash deposits and financial assets, worth more than €100,000;
Work or have worked in the financial sector for at least one year in a professional position that requires knowledge of the transactions or services envisaged, or must have held an executive position for at least 12 months within legal entities that meet the requirements described for legal persons;
The person must have conducted transactions of significant size in the capital markets with an average frequency of 10 transactions per quarter in the previous four quarters.
Legal persons must enjoy at least one of the three criteria:
Own funds of at least €100,000;
Net sales equal to at least €2 million;
The balance sheet of at least €1 million.
If the investor classifies as sophisticated, he or she must prove his or her status by attaching a document, as indicated above.
On the other hand, if the investor classifies as unsophisticated, the platforms must submit a knowledge verification entry test, after which a profile (high – medium and low) will be assigned.
The unsophisticated investor who, with the result of the test, had demonstrated little knowledge in the investment field is assigned “low profile.”
In this case, the European legislator has provided limits to protect his savings.
Specifically, if this investor profile wished to make an investment in an amount greater than the higher of €1,000 or 5 percent of net worth, the platform is required to present a risk warning and require the investor to provide a consent whereby he assumes responsibility for the investment.
Recrowd’s position for unsophisticated investors with a low profile, however, is different. The platform, and still limits the investor with low results, granting investments only under €1,000 or 5 percent of net worth.
Recrowd’s other choice affects the right of reconsideration, granted by the Regulations only to unsophisticated investors.
The Regulation mentions a reconsideration period of 4 calendar days to the investment, only for unsophisticated investors, from the time the investment was made.
Recrowd, on the other hand, has chosen to extend the opportunity to reconsider the investment, and thus to withdraw, to all investors, democratizing the right of withdrawal to all investors, sophisticated and unsophisticated.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in Crowdfunding buzz. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us
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