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Crowdfunding Licenses in Lithuania

Unlock the opportunities in European crowdfunding with our tailor-made licensing services. Embrace the vibrant world of crowdfunding, where entrepreneurial vision meets eager investors to foster innovation and growth.

Whether you are attracted by lending platforms, licensing investments and economic enterprises, or by the diversified field of investment-based crowdfunding, we can provide you with comprehensive support to help you deal with the complex regulatory issues.

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Understanding crowdfunding: Empowering projects through collective support

Crowdfunding is a revolutionary method of financing that uses the power of collective support to fund projects in various fields. Whether they are individuals, start-ups or small and medium-sized enterprises, crowdfunding platforms provide them with a channel to attract funds from the public, which is different from the traditional investment channels. Contributors to crowdfunding campaigns can receive a range of rewards, ranging from souvenirs to project shares, depending on the financing conditions. This inclusive model not only democratizes access to funding, but also promotes community participation and support for innovative causes.


EU Crowdfunding Regulation Navigation: The Licensing Road

The regulatory environment for crowdfunding in the EU is evolving rapidly, with strict requirements set out in Regulation 2020/1503 (EU). Licensing systems play a key role in ensuring the transparency, security and reliability of the crowdfunding ecosystem. It requires crowdfunding platforms to adhere to strict standards in terms of risk management, user data protection and fair conditions for all participants. By obtaining a license, crowdfunding service providers demonstrate their commitment to compliance and integrity, thereby enhancing trust between investors and entrepreneurs.


Why choose Lithuania for crowdfunding licensing?

In Europe, Lithuania is the top destination for crowdfunding licences. The recently adopted European Crowdfunding Service Providers Regulation (ECSPR) unifies and simplifies crowdfunding rules across the EU, providing seamless access within the vast Single Market. What sets Lithuania apart, however, is that it has a robust regulatory framework specifically for crowdfunding activities that ensures investor protection and market integrity. With a favourable regulatory environment and a commitment to financial innovation, Lithuania offers a fertile ground for aspiring crowdfunding service providers to thrive and expand their business within the EU.


Lending-Based Crowdfunding: Enhancing Investment Capacity


Investment-Based Crowdfunding: Bridging Opportunities


In addition to the core crowdfunding model, a range of ancillary services are available with a licence:

    ■ Custody of assets

Secure investors' assets with a robust asset custody solution that enhances trust and confidence in the platform.

    

    ■ Payment Services

Facilitate seamless transactions between investors and project owners through efficient payment services, enhancing user experience and platform reliability.

    

    ■ Use of Special Purpose Carriers

Leverage the flexibility of special purpose vehicles to structure complex crowdfunding transactions and optimize risk management and compliance.

    

    ■ Application of credit score

Use advanced credit scoring mechanism to evaluate the feasibility of the project, strengthen the investment decision-making process, reduce risk and maximize returns.

    

    ■ Pricing and Interest Rate Advice

Provides valuable insights on pricing and interest rates, enabling investors to make informed decisions and optimize capital allocation.

    

    ■ Operation Bulletin Board

Facilitate transparent communication and knowledge sharing through interactive bulletin boards to build a vibrant community of investors and project owners.

    

    ■ Establishment of a contingency fund

Ensure the resilience and sustainability of crowdfunding platforms by establishing emergency funds to protect against unexpected events and market fluctuations.


Costs and conditions of obtaining a crowdfunding license in Lithuania


    Phase 1: Strategy development and license assessment-€ 1,900

A wide range of business consulting services, including business model analysis, risk assessment, compliance assessment, review of necessary documents, customized plans/strategies.

    

    Phase 2: Pre-licensing of company registration-€ 7,800

Assist in setting up a company in Lithuania, opening a company account, preparing supplementary documents, providing specialist recruitment and office rental solutions, etc.

    

    Phase 3: Licensing and post-licensing-€ 4,900

Submission of the application to the Bank of Lithuania, communication with the regulator, assistance before obtaining a license, compliance assessment after the license is issued.


Unlocking Your Crowdfunding Potential: Licensing Services

Crowdfunding in Lithuania offers great opportunities for entrepreneurs and investors. However, navigating the regulatory environment can be complex and challenging. This is where our strength lies. We are good at providing comprehensive licensing services according to your needs, ensuring a smooth and successful process from application to approval. Understanding the initial capital requirements for crowdfunding licensing: Crowdfunding service providers must demonstrate prudent financial safeguards, including an initial capital of at least 25,000 euros and a portion of the expected profits for the next few years. Employee requirements: The key personnel responsible for managing the crowdfunding service provider must have a good reputation, sufficient knowledge, skills and experience. This ensures the integrity and reliability of the platform. Entity offices: While entity offices must be established in the Member State issuing the license, they are not required for activities in other Member States, thus providing operational flexibility. Operating Procedures: Companies must establish sound governance structures, internal control mechanisms and risk management procedures to ensure compliance with regulatory standards. The application process consists of several steps: Company registration: The business must register the company and deposit sufficient capital into a bank account. Document preparation: Comprehensive documents, including the legal form of incorporation, governance arrangements and operating agreements, must be prepared for submission.

    ■ Document preparation

    ■ Submission to the Bank of Lithuania: The completed application and supporting documents will be submitted to the Bank of Lithuania for evaluation. While the evaluation period is 25 working days, the process can go on for months until the bank is satisfied with the application.

    ■ Further evaluation: After the application is accepted, the Bank of Lithuania will conduct a further substantive evaluation before issuing a license to ensure compliance with regulatory standards.



Frequently Asked Questions (FAQ)
What is the minimum initial capital required to obtain a crowdfunding license in Lithuania?
The minimum initial capital requirement is € 25,000 of own funds plus a portion of the expected profit/loss. In addition, the insurance policy can also meet the required amount.
What are the personnel requirements for managing potential crowdfunding service providers?
The staff responsible for management must be natural persons of good reputation with sufficient knowledge, skills and experience, including knowledge of the Lithuanian language.
Is a physical office required to carry out activities outside the licensing member country?
No, it is only necessary to set up a physical office in the Member State issuing the licence.
How long does the application process take?
Although there is an evaluation period of 25 working days, the evaluation process may last several months before the Bank of Lithuania is satisfied with the application documents. The regulator then has three months to review and approve the application.
What is the role of the Bank of Lithuania in the application process?
The Bank of Lithuania assesses the completeness of the application and supporting documents within 25 working days. Once accepted, a further substantive assessment will be carried out before the license is issued to ensure compliance with regulatory standards.
What types of crowdfunding does the license regulate?
The license covers equity and debt crowdfunding platforms. This includes platforms that facilitate the exchange of shares in start-ups or established businesses, as well as platforms that arrange loans for businesses.
Can foreign entities apply for a crowdfunding license in Lithuania?
Yes, foreign entities can apply for a crowdfunding license in Lithuania, but must set up a branch or representative office in the country to handle local business and compliance matters.
What are the ongoing reporting requirements for licensed crowdfunding platforms?
Licensed platforms must submit an annual report to the Bank of Lithuania detailing financial performance, compliance with regulatory requirements and any significant changes in operations or management.
Is an external audit required?
Yes, an annual external audit is required. The financial statements of crowdfunding platforms must be audited by accredited auditors to ensure transparency and compliance with financial regulations.
What consumer protection measures do crowdfunding platforms need to take?
Under GDPR, platforms must take steps to ensure transparent communication, fair treatment of investors, and protection of personal and financial data.
How do crowdfunding platforms handle complaints?
Crowdfunding platforms must have clear and understandable complaint handling procedures. They must respond to complaints within a reasonable period of time and must report annually to the regulator on the nature and frequency of complaints.
What happens if crowdfunding platforms fail to comply with licensing requirements?
Violations can result in penalties such as fines, suspension of activities, or license revocation, depending on the severity of the violation.
Will the license be revoked?
Yes, the Bank of Lithuania has the right to revoke the crowdfunding license if the platform repeatedly fails to comply with regulatory requirements or provides false information during the application process.
Do crowdfunding platforms have specific advertising guidelines?
Yes, all advertising on crowdfunding platforms must be clear, not misleading, and must provide potential investors with a balanced view of potential risks and rewards.
What financial records must crowdfunding platforms keep?
Platforms must keep comprehensive records of all transactions, financial statements, contracts, and communications with investors for a minimum of five years.
Are there restrictions on the types of crowdfunding projects?
Regulations typically do not limit the types of projects that can be crowdfunded, but require platforms to conduct due diligence to ensure the legality and compliance of listed projects.
What due diligence does the crowdfunding platform need to conduct on the project sponsor?
The platform must verify the identity, background, and financial health of the project sponsor to prevent fraud and ensure the integrity of the platform.
Can the license be transferred to another company?
Crowdfunding licenses are non-transferable. Any new entity wishing to operate a crowdfunding platform will have to apply for its own license.
What training do employees of crowdfunding platforms need to receive?
Staff, especially those responsible for compliance and investor relations, must receive regular training on the latest regulatory developments, risk management and ethical standards.

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