The ministry is considering revising the applicable liability rules for the crowdfunding industry.
(Photo: imago images/Waldmüller)
Berlin The Federal Ministry of Finance (BMF) is considering revising liability rules that were only introduced in the last legislative period for swarm financing platforms and are to apply from November 2023. This emerges from the BMF’s response to a parliamentary question from the Union.
Swarm financiers or crowdfunders collect capital from many small investors via Internet platforms and invest it in companies or projects. But after the EU harmonized the market for crowdfunding with a directive two years ago, CDU finance expert Johannes Steiniger criticized that “we implemented it too strictly in Germany”. He is the initiator of the current inquiry at the BMF.
Guido Sandler, board member of the Bundesverbandes Crowdfunding and CEO of the real estate platform Bergfürst, also expresses criticism: “The liability rules were made stricter than with other capital market regulations in Germany”. In his opinion, “in no other European country is the liability system so strict”.
According to the current regulation, managing directors and employees of issuers would have to be liable with their personal assets for an issue even in the case of “simple negligence”, explains Sandler. The association advocates that liability should only apply in the case of “gross negligence”. In addition, it should refer to the issuer, not to the management bodies.
In fact, the Federal Council had made a similar proposal in the past legislative period and advocated solving the liability issue in the way the association is now proposing. The coalition is now considering this option.
“Highly Unfair”
However, the situation is not quite as clear as it seems. Many investor advocates disagree. “Currently, the investor does not have to prove the existence of gross negligence, but the issuer has to prove its non-existence,” says investor lawyer Peter Mattil, describing the status quo. And that’s exactly what you shouldn’t shake. He considers a further privilege, i.e. the lifting of the reversal of the burden of proof, to be inappropriate and “highly unfair”.
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The current figures give an indication of how well Germany is holding up in an international comparison. They actually show that Germany is already very attractive for foreign crowdfunding platforms. Around 533 million euros were collected in 2022 through crowdfunding. A third of this was accounted for by eight foreign crowdfunding platforms, nominally 173 million euros.
However, it must be mentioned that the figures are not entirely precise. The reason: The financial regulator Bafin only records the planned issue volume, not the actual placement.
Is there a locational disadvantage?
According to figures from the Federal Association of Crowdfunding, the swarm financing platforms operating in Germany collected around 343 million euros in 2022, roughly as much as in 2021. Most of the funds raised went into real estate projects.
There is still a lot that needs to be done on the part of the legislator in order to establish crowdfunding in Germany as an effective asset class. CDU finance expert Johannes Steiniger
According to the CDU financial expert Steiniger, there is a risk of a locational disadvantage. Foreign platforms from countries “with more liberal liability regimes” would “push into the German market and soon squeeze out German companies due to their size.”
Swarm financiers are also hoping for further relief from the federal government. It is about the legal form of the issuer. Startups are often formed as a limited liability company. However, GmbH shares cannot be financed via a crowdfunding platform. Your only option is to take a loan.
“There is still a lot that needs to be done on the part of the legislature in order to establish crowdfunding in Germany as an effective asset class,” criticizes Steiniger.
High-risk investments
However, investments in crowdfunding projects are high-risk investments for investors. Since they usually participate with subordinated loans, they get nothing if the project fails or the companies founded with crowd capital go bankrupt. Credit claims from banks, on the other hand, are serviced with priority.
The Hessian consumer center also points out that investors who participate in crowdfunding usually have no say in the use of funds or influence business decisions.
More: Swarm financier Investor Group and Oneplanetcrowd join forces