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Can you be subject to penal liability if you offer shares in a limited company for public sale?

Yes!

On 4 May 2021 the Minister of Finance, Regional Funds and Policy presented a longawaited draft act on crowdfunding for European crowdfunding service providers of business projects (“Regulation 2020/1503”). The purpose of the Regulation 2020/1503 is to regulated, systematize and expand the activity of crowdfunding platforms. For more information, see the previous article [read].

The regulations penalising the provision of crowdfunding services without necessary permission and providing for a possible fine of up to PLN 5,000,000, as set forth in the draft act, arouse controversy.

Offering shares in a limited company for sale is one of crowdfunding services. It is necessary to explain that such offering consists in matching investors interested in financing business projects (in this case, the purchase of company shares) with project owners through the crowdfunding platform. Thus, this does not apply to any public proposal of sale of shares in a limited company, but the sale through the crowdfunding platform, i.e. a publicly available Internet information system operated or administered by a crowdfunding service provider. And that means that the service provider will be subject to penal liability if it does not obtain a prior permission for that type of business.

 

Maciej Marzec

 

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