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ARE CROWDINVESTING PLATFORMS MANAGERS OF ALTERNATIVE INVESTMENT FUNDS?

E. Culinovic Herc, N. Grkovic

Abstract

Crowdinvesting is a recently emerged business practice recognised as an alternative method of raising risk capital in the early stage financing of start-ups and small enterprises. It involves a collection of relatively small amounts of money contributions from a general public, via platform operator. In return, investors acquire equity or debt financial instruments issued either by project holder seeking finance (direct crowdinvesting) or a special purpose vehicle established by the platform operator or a third party which in turn invests in financial instruments issued by the project holder (indirect crowdinvesting). Authors provide a brief insight into business models employed by the platform operators and explore whether some of those models from the legal point of view may fall within the scope of Alternative Investment Fund Managers Directive. Having in mind the broad scope of this Directive, possible legal consequences of qualifying platform operator as a manager of alternative investment fund as well as the role of the manager as stipulated in the Directive, paper examines whether the crowdinvesting entity may be qualified as ''a collective investment undertaking'' and whether it invests in accordance with a ''defined investment policy'' which are crucial prerequisites for such qualification. Possible application of the de minims exclusion as well as holding company exemption and securitization special purpose entity exemption are taken into consideration.

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DOI resolver: doi.org/10.5593/sgemsocial2015/b21/s5.065

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