Crowdfunding is defined as the use of small amounts of capital from a large number of individuals to finance a new business venture. Crowdfunding makes use of the easy accessibility of vast networks of people through crowdfunding platforms which bring investors and entrepreneurs together.
General requirements for crowdfunding in Lithuania
You need to be established in the Republic of Lithuania in order to be enlisted in the Public List of Crowd funding Platform Operators. It should be noted that Lithuania does not regulate crowdfunding based on non-financial consideration/incentives. Funds can be generated through equity, non-equity, loan, other credit arrangements. The right to engage in crowdfunding activities is granted after the operator is enlisted into the public list of crowdfunding platform operators.
Required documents and information
In order to be enlisted as a crowdfund platform operator and to obtain a crowdfunding licence in Lithuania applicant must submit to the Bank of Lithuania information regarding members and managers (heads) of the platform operator, information on prudential requirements of the platform, a plan in case ongoing concern and other documents. Managers of the platform must have a good repute and must be without criminal records.
In general the applicant will be requested to provide the following:
- the information on investment-related risks;
- administrative measures in designed to prevent conflicts of interest;
- a description of the procedure for using the crowdfunding platform;
- rules for secondary trading in the crowdfunding platform provided the platform operator intends to engage in secondary trading;
- the method of calculating the remuneration for the operator of crowdfunding platform;
- the information on taxes applicable to a financing transaction and types of such taxes;
- the terms and procedure of funds repayment to investors in the event the project owner does not raise a sufficient amount to develop the project;
- the information on risk mitigation measures, if any;
- rules for handling complaints of customers;
- the procedure for implementing rights of a personal data subject.
Special capital requirements for operators of crowdfunding platforms is not required, but operator must comply with at least any one of the following criteria during the whole period of its activity:
- The equity capital must reach the minimum amount of EUR 40 000 or he must possess a surety bond issued by an insurance company or a document of surety ship or guaranty issued by a financial institution for the minimum amount of EUR 100,000 per one funder’s claim for compensation of losses and EUR 500,000 for all funder’s claims for compensation of losses per year.
- The operator shall calculate the equity capital requirement at the end of each financial year and the equity capital requirement shall be 0.2 percent of the amounts granted as funding though the crowd funding platform and not repaid to the funders yet.
Time required for registration
The supervisory authority shall, no later than within 30 business days of the receipt of an application and all documents, data and information material for assessment, carry out an assessment and take a decision on entering on the Public List of Crowdfunding Platform Operators and notify the applicant thereof.