Policies

Crowdbase client categorisation policy

Introduction

The purpose of this Client Categorisation Policy is to provide users with a clear understanding of how Crowdbase classifies and treats its clients in accordance with Regulation (EU) 2020/1503 on European Crowdfunding Service Providers (ECSPR). This policy outlines the different categories of investors and the corresponding levels of protection and obligations for each category.

Client Categories

Under ECSPR, Crowdbase classifies clients into two categories:

  1. Sophisticated Investors
  2. Non-Sophisticated Investors

These categories determine the level of investor protection measures that apply, in accordance with the ECSPR.

Non-Sophisticated Investors

By default, all investors are considered non-sophisticated unless they request and qualify for sophisticated investor status. Non-sophisticated investors benefit from the highest level of regulatory protection.

Protections for Non-Sophisticated Investors

Non-sophisticated investors benefit from enhanced regulatory safeguards as mandated by the ECSPR, including:

  • Entry Knowledge Test: Prospective non-sophisticated investors must complete an assessment to determine their understanding of the risks associated with crowdfunding investments.
  • Simulation of Ability to Bear Loss: Investors are required to simulate their ability to bear potential investment losses, calculated as 10% of their net worth.
  • Enhanced Risk Warnings: Crowdbase provides enhanced risk disclosures. This is particulatrly relevant if an investment surpasses the higher of either €1,000 or 5% of an investor’s net worth, or if there are other campaign-specific risks.
  • Pre-contractual Reflection Period – Non-sophisticated investors are entitled to a four-calendar-day reflection period during which they can revoke their investment commitment without penalty or the need to provide a reason.

Sophisticated Investors

Sophisticated investors are natural or legal persons who possess the awareness of the risks associated with investing in capital markets and have adequate resources to undertake those risks without exposing themselves to excessive financial consequences.

Criteria for Sophisticated Investor Status

To be classified as a sophisticated investor, an investor must meet the criteria outlined in Annex II of the ECSPR.

For Legal Persons:

A legal entity must meet at least one of the following criteria:

  • Own funds of at least €100,000.

  • Net turnover of at least €2,000,000.

  • A balance sheet of at least €1,000,000.

For Natural Persons:

An individual must meet at least two of the following criteria:

  • A personal gross income of at least €60,000 per fiscal year, or a financial instrument portfolio (including cash deposits and financial assets) that exceeds €100,000.

  • The investor works or has worked in the financial sector for at least one year in a professional position that required knowledge of the transactions or services envisaged, or has held an executive position for at least 12 months in a legal person that meets the criteria for a sophisticated investor.

  • The investor has carried out transactions of a significant size on the capital markets at an average frequency of 10 per quarter over the previous four quarters.

Professional Clients as Sophisticated Investors:

Entities classified as professional clients under Directive 2014/65/EU (MiFID II) are automatically regarded as sophisticated investors upon providing proof of their status to Crowdbase.

How to Request Sophisticated Investor Status

By default, all newly registered investors are categorised as non-sophisticated. Before making their first investment, investors will be asked to complete a declaration indicating whether they meet the criteria to be classified as sophisticated investors.

Investors who meet the criteria but still wish to be treated as non-sophisticated can choose to do so. Crowdbase will assess each request and may ask for supporting documentation. The approval of sophisticated investor status is valid for two years, after which a new request must be submitted.

Implications of Sophisticated Investor Status

Sophisticated investors:

  • Do not benefit from the specific protections afforded to non-sophisticated investors.
  • Are not required to complete the entry knowledge test or the simulation of the ability to bear loss.

Client Categorisation Process

  • Upon registration and verification, all investors are initially categorised as non-sophisticated.
  • Before making their first investment, investors must declare whether they meet the criteria for sophisticated status.
  • Investors can request a change in their categorisation at any time.
  • Crowdbase reserves the right to reassess and verify categorisations based on regulatory requirements.