Crowdfunding in Malta

Normally, it takes three elements for crowdfunding in Malta to take place. They include:

• an individual who comes up with an idea;
• an individual willing to fund an idea;
• a platform used for implementing an idea.

Requirements

Obtaining a crowdfunding service provider license in Malta requires filing an application (along with a business plan) with relevant regulatory authorities. It’s also necessary to describe in detail services that will be provided via an online platform. Exactly what type of license is necessary depends on the services a particular applicant intends to provide. 

There’s currently no structure capable of issuing an MFID passport for engagement in crowdfunding activities in Malta. Hence, potential applicants must ensure compliance with the requirements for registration of crowdfunding platforms in Europe, and more specifically, in countries where such services will be provided.

A platform must ensure compliance with the requirements for capital that apply to their respective license category.

Disclosure

Offering securities via a Malta-registered crowdfunding platform requires compliance with minimum requirements for disclosure applicable to this type of activities. Adherence to the EU requirements will be necessary if an offer requires submitting a prospectus. If a prospectus isn’t necessary, issuers are required to submit a document in which they must indicate information about their identity (i.e. contact info, the line of business they’re in, an investment project & possible risks & benefits).

The following instruments traded on investment platforms include:

• shares (except for CIC & convertible ones, as well those of them in which derivatives are embedded);
• bonds (except for debt instruments that are structured in such a way that prevent clients from understanding possible risks).

Limitations

Investors aren’t allowed to invest more than five thousand euros in financial instruments registered on crowdfunding platforms. Investments exceeding twenty percent of investors’ net yearly income & made via a crowdfunding platform in Malta  aren’t permitted either. Offering securities on crowdfunding platforms in the Republic of Malta is forbidden; the only exception is made for investments whose amount doesn’t exceed one million euros. Launching projects can only be done on the 1-project-per-1-platform basis.

Malta: Registration of a Blockchain-Based Crowdfunding Platform

Gathering funds through crowdfunding platforms can be made more effective if blockchain technology is used. Blockchain has quite a few distinctive advantages, such as:

• decentralization;
• tokenization;
• accessibility;
• immediate settlement.