Between investor protection and access to crowdfunding: The entry knowledge test and the simulation of the ability to bear loss (Art 21 and Annex II)

Abstract

Article 21: Entry knowledge test and simulation of the ability to bear loss 1 Crowdfunding service providers shall, before giving prospective non-sophisticated investors full access to invest in crowdfunding projects on their crowdfunding platform, assess whether and which crowdfunding services offered are appropriate for the prospective non-sophisticated investors. 2 For the purposes of the assessment referred to in paragraph 1, crowdfunding service providers shall request information about the prospective non-sophisticated investor's experience, investment objectives, financial situation and basic understanding of risks involved in investing in general and in investing in the types of investments offered on the crowdfunding platform, including information about: (a) the prospective non-sophisticated investor's past investments in transferable securities or past acquisitions of admitted instruments for crowdfunding purposes or loans, including in early or expansion stage businesses; (b) the prospective non-sophisticated investor's understanding of the risks involved in granting loans, investing in transferable securities or acquiring admitted instruments for crowdfunding purposes through a crowdfunding platform, and professional experience in relation to crowdfunding investments. 3 Crowdfunding service providers shall for each non-sophisticated investor review the assessment referred to in paragraph 1 every two years after the initial assessment made in accordance with that paragraph. 4 Where prospective non-sophisticated investors do not provide the information required pursuant to paragraph 2, or where crowdfunding service providers consider, on the basis of the information received under that paragraph, that the prospective non-sophisticated investors have insufficient knowledge, skills or experience, crowdfunding service providers shall inform those prospective non-sophisticated investors that the services offered Joeri De Smet and Veerle Colaert-9781802209945