Crowdfunding and Participation Agreements

In February 2024, the Czech National Bank issued an opinion on the regulation of “crowdfunding” internet platforms, which operate on the principle of participation agreements.

The participation model is understood as a business model in which the loan is provided to the project owner by the operator of the internet platform, and subsequently, a portion of the credit risk is transferred to the investor. The yield from the participation is derived from the underlying loan.

These platforms are not subject to crowdfunding regulation - it only covers models where the credit relationship is established between the investor and the project owner.

However, this does not mean that they operate outside of financial market regulation - specifically, these models may fall under the following regulations:

• providing investment services according to the Capital Market Business Act,
• accepting deposits from the public according to the Banking Act,
• rules for investment companies and funds (especially with regard to the possibility of meeting the characteristics of a covert collective investment fund) according to the Act on Investment Companies and Investment Funds, and
• providing payment services according to the Payment System Act.

Each business model, therefore, needs to be carefully evaluated in terms of the possible impact of the above-mentioned financial regulation.

If you are interested in our services in the field of crowdfunding, contact us at info@stuchlikova.com or call +420 222 767 393 to arrange a consultation.