Open a Crowdfunding Company in Cyprus

Open a Crowdfunding Company in Cyprus

Updated on Sunday 29th October 2017

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open-a-crowfunding-company-in-cyprus.jpgCrowdfunding represents a method of financing companies, projects or businesses which is based on small amounts of money collected from numerous investors through an online platform. Crowdfunding can be a viable option to finance a business and it could be more accessed by certain start-ups than by normal loans from banks in Cyprus. In this article, our lawyers in Cyprus touch on a few key points related to opening a crowdfunding company in Cyprus.

Legal framework for crowdfunding in Cyprus

In Cyprus, there are not unitary or other types of regulations for crowdfunding. The European Banking Authority has recently made public an opinion to the effect that, to level the playing field and to avoid “regulatory arbitrage”, the EU regulations have to be introduced based on the current EU legislation.
If the crowdfunding involves an investment model consisting of issuing shares or other securities to contributors or investors, the requirements of the prospectus directive and the Cyprus Prospectus Law, as well as the Law 114(I)/2005 may apply, under certain conditions. Our Cypriot lawyers can provide more details on what these conditions consist of. 

Types of crowdfunding in Cyprus 

Crowdfunding happens through an online platform where the fundraiser places a public donation campaign. The project presentation is crucial at this point, since it is also the initial stage when the project idea is known. A deadline for the funding and the needed amount of money are also published here. In case you are interested to set up a crowdfunding business in Cyprus, our attorneys in Cyprus can help.
Depending on the type of investments which are made, crowdfunding in Cyprus can be:
Equity crowdfunding: shares are provided in exchange for money;
Debt crowdfunding: the investor gets his capital back, including interest;
Donation crowdfunding: these are investments without an expectation, made only for the cause. Sometimes, a reward can be offered to the investor, like tickets, free gifts or albums.
The type of crowdfunding used may depend on the kind of project. Our lawyers in Cyprus can offer more information about how lending is regulated in the country and which option is more suitable for your needs.
For more details about alternative funding options for businesses in Cyprus, as well as for any type of legal advice, please contact our Cypriot law firm.