Investor Groups as a regulatory speciality of crowdfunding platforms

Investor groups have traditionally been a derivative of joint account contracts. Participation account contracts have existed for all types of investments. Now they are intended to be limited to investor groups that want to provide the services of participatory financing.

Investor pools are a regulatory speciality of crowdfunding platforms that allow investors to group together to invest in the same project. This grouping can be voluntary or mandatory, and can be promoted by the crowdfunding platform or by the investors themselves.

What are the Investor Groupings?

Investor pools can have different organisational forms, but are generally based on the joint subscription of a project by a group of investors. Investors in a pool may be individual investors or institutional investors.

Legal and regulatory requirements

Investor groups are subject to the requirements set out in the national legislation of the Member State in which they operate. In Spain, the national legislation regulating investor groups is Law 5/2015 of 27 April 2015 on the promotion of business financing.

These requirements include the following:

• Information to investors: Investor groups must provide investors with the information set out in national law.
• Investor protection: Investor groups must take the necessary measures to protect investors, in accordance with national law.

Different mechanisms for pooling investors

The different mechanisms for pooling investors can be classified into two broad categories:

• Voluntary pools: In voluntary pools, investors voluntarily decide to group together to invest in the same project. The grouping can be promoted by the crowdfunding platform or by the investors themselves.
• Mandatory groupings: In mandatory groupings, investors are obliged to group together to invest in the same project. The grouping is usually promoted by the crowdfunding platform, which establishes a minimum number of investors required for the project to be funded.

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Article 56 of the Corporate Finance Act

Article 56 of the Ley de Financiación Empresarial regulates investor groups in Spain. This article establishes the following requirements for investor groups:

• Information to investors: Investor groups must provide investors with the following information:
  • The identity and registered office of the group.
  • The objectives of the grouping.
  • The risks associated with the investment.
  • Investors’ rights and obligations.
• Investor protection: Investor groups must take the following measures to protect investors:
  • Establish an adequate internal control system.
  • Adopt measures to avoid conflicts of interest.
  • Inform the CNMV of the projects in which they invest.

Role of the CNMV in relation to these entities

The CNMV has an important role to play in investor groups. The CNMV is the competent authority to supervise and control crowdfunding platforms operating in Spain. In the case of investor groups, the CNMV has the following functions:

• Monitor investor groups’ compliance with legal and regulatory requirements.
• Receive information from investor groups on the projects in which they invest.
• Take action in case of non-compliance of investor groups with legal and regulatory requirements.

In conclusion, investor pools are a regulatory speciality of crowdfunding platforms that allow investors to pool together to invest in the same project. Investor pools are subject to the requirements set out in the national law of the Member State in which they operate. In Spain, the CNMV plays an important role in investor groups, as it is the competent authority to supervise and control crowdfunding platforms operating in the country.

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