Crowdfunding is an alternative capital raising method becoming increasingly popular in Georgia. It is a way for startups and small businesses to raise funds directly from investors via online platforms, bypassing banks. The National Bank of Georgia recently introduced regulations governing lending-based and equity-based crowdfunding. These regulations aim to protect investors and ensure platform transparency. Legal services in this field involve licensing crowdfunding platforms, developing their operating rules, and legally regulating relationships with investors.
What Does the Crowdfunding Legal Service Cover?
Our lawyers assist both platforms and issuers (fundraisers):
- Platform Registration: Registering the crowdfunding platform with the National Bank, including verifying authorized capital and administrator compliance.
- Developing Internal Rules: Drafting policies for project listing, investor registration, risk assessment, and conflict of interest management.
- Investment Limit Compliance: Ensuring legal mechanisms to adhere to regulatory limits (e.g., maximum amount for non-accredited investors).
- Contract Drafting: Preparing standard agreements between the platform, investor, and issuer.
- Risk Disclosure: Assisting in the preparation of the "Key Investment Information Sheet" (KIIS), which informs investors about risks.
Common Scenarios and Business Needs
Crowdfunding legal support is needed for:
- Startups: A company seeking Seed Funding wants to raise money from the public in exchange for shares.
- Real Estate Projects: A developer uses crowdfunding to finance construction, where investors become shareholders in the project.
- Lending Platforms (P2P): A platform connecting individuals wishing to lend money with borrowers.
- Cross-Border Crowdfunding: A Georgian company tries to raise funds from foreign platforms (e.g., Kickstarter, Indiegogo), requiring compliance with local and international laws.
Georgian Legal Framework
The field is regulated by the Law of Georgia on Securities Market and the Decree of the President of the National Bank "On Regulating the Activities of Lending and Investment Crowdfunding Platforms". These regulations strictly define platform obligations, specifically: segregation of client funds (keeping them in a separate account), project due diligence, and investor information. Promising guaranteed returns is prohibited.
Service Process: What to Expect
If you are creating a platform, the lawyer will prepare the full registration package and "Operational Manual." If you are an issuer, the lawyer will help structure the campaign so as not to violate securities laws (e.g., public offering rules). Special attention is paid to AML/KYC procedures to prevent the platform from becoming a tool for money laundering.
Why Choose Legal.ge?
Crowdfunding is a nascent field in Georgia, and regulations are still being tested. On Legal.ge, you will find innovative lawyers familiar with this specific framework. We will help you utilize this modern financing method legally and safely.
Updated: ...