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Subsidiary Legislation 330.15, Malta Financial Services Authority Act (European Crowdfunding Service Providers for Business) Regulations (the “Regulations”) serve to implement the requirements of Regulation (EU) 2020/1503 on European crowdfunding service providers for business (the “ECSP Regulation”). The ECSP Regulation establishes uniform rules at EU level for lending-based and equity-based crowdfunding services related to business financing and rules regulating crowdfunding service providers including strict rules to protect investors. This high-level Regulation was applicable from 10 November 2021 and is supplemented by means of various Implementing Technical Standards and Regulatory Technical Standards issued/to be issued thereunder.

The Regulations appoint the Malta Financial Services Authority (the “MFSA”) as the competent authority responsible for carrying out the functions and duties provided for in the ECSP Regulation, and empowers the MFSA to issue rules for such purpose. On the 25 January 2022 the MFSA issued the Crowdfunding Rules to which market participants applying for authorisation as a Crowdfunding Service Provider  (“CfSP”),  and CfSPs will be required to adhere to. These Rules are split into two chapters:

• Chapter 1 relates to compliance with the technical standards supplementing the ECSP Regulation. To date the relevant regulatory technical standards and implementing technical standards, drafts of which are contained in the Final Report – Draft Technical Standards under the ECSP Regulation, have been submitted to the European Commission for consideration and adoption by May 2022. The contents of these regulatory technical standards range from the authorisation of CfSPs; complaints handling by CfSPs; prevention, management and disclosure of conflicts of interests by CfSPs; business continuity plans and reporting by CfSPs to the contents of the Key Investment Information Sheet and disclosure of information to investors and requirements on credit risk assessment and risk management, amongst others.
• Chapter 2 establishes the applicable national marketing requirements for crowdfunding services provided by CfSPs through marketing communications issued on or from Malta or which is circulated, published, broadcasted or otherwise received in Malta. Marketing Communication is defined as any information or communication from a CfSP to a prospective investor or prospective project owner about the services of the CfSP, other than investor disclosures required under the ECSP Regulation. This chapter outlines the high-level principles, standards and relevant risk warnings applicable to such marketing communications.