The second reform of crowdfunding was enacted by the decree of October 28, 2016, implementing new measures to foster the development of securities and loans proposed by crowdfunding platforms.
Since October 30, 2016, platforms with the status of Participative Investment Advisors (“CIP”) may propose financing, in the form of financial securities, for projects wishing to raise up to 2.5 million euros, whereas they were previously capped at 1 million euros. It should be noted, however, that this increase in the cap is subject to a condition: “Offers in excess of one million euros may not involve equity securities representing more than 50% of the issuer’s share capital“. Thus, the decree prevents the transaction from costing the issuer the majority of the capital and does not excessively dilute the shareholders present before the raising of funds.
In order to reach a wider audience, such platforms are no longer limited to the issuance of single shares or fixed-rate bonds, but may henceforth offer preferred shares, convertible bonds and, under certain conditions, participative securities. Moreover, it is now possible to lend, on the platforms registered as participatory financing intermediaries (“IFP”), €2 000 per project, for a loan with interest, and €5 000 for an interest-free loan. These caps were hitherto limited to €1 000 and €4 000 respectively.
Finally, the decree also specified the “mini bounds” regime. Companies with at least three fiscal years may issue “mini bounds” of up to 2.5 million euros for every twelve-month period, which may be issued and transferred through the electronic recording system of the blockchain.
According to the President of the French Crowdfunding Association, these measures, supported and set up by industry professionals and the public authorities, are generating a new impetus for crowdfunding, offering broader funding opportunities for companies, while protecting savers.