The Netherlands Update Online Equity Investing Rules

On April 1st, 2016, a new crowdfunding decree will enter into force in the Netherlands. This is the result of an effort started by The Netherlands Authority for Financial Markets (AFM) in December 2014, when they published a report on crowdfunding, drawing attention to perceived problems in the current regulations and offering their recommendations about how the digital investing market in the country could develop more sustainably.

The Netherlands may have a small fintech market, but it’s an interesting one. Symbid, one of the world’s first investment crowdfunding platforms, was born and is currently based there. A report by consultancy firm Douw & Koren (D&K), published at the end of 2015, shows that crowdfunding has doubled in the Netherlands during 2015, with €128M raised in comparison to the €63M of 2014. More than 3500 projects were funded with an average of €90,000 per project.

Now with the new rules, the market is expected to develop further. Anne Hakvoort of FG Lawyers, a law firm in Amsterdam, has published a comprehensive report regarding the new debt and equity crowdfunding rules.

So, what are the main changes?

1. Increased investment limits for retails investors
The limit for small investors has been doubled to €40,000 for equity-based crowdfunding and €80,000 for peer-to-peer (P2P) lending.

2. Investors knowledge assessment
The digital finance platform operators have to perform a test to determine if the investment is appropriate for the specific retail investor. The test should survey if the person interested to invest possesses adequate knowledge to understand the risks involved with crowdfunding in general and in the specific investment opportunity.

3. 24 hour cooling period for the investor to change their mind
The digital investing platform should grant the investor the possibility to cancel the investment within 24 hours, without any costs being charged.

4. Monitoring form to be submitted to the Dutch securities market regulator two times a year
Equity and debt digital investing platforms must submit a form, to the Netherlands Authority for Financial Market, on a semi-annual basis, indicating the size and the financial situation of the platform, the number of active investors in crowdfunding projects on the platform, the number of requests for crowdfunding financing, the number of accepted crowdfunding projects, the number of successfully financed crowdfunding projects and the characteristic of projects such as the type of loans and number of defaults.

There is also a list of requirements for digital finance platforms on areas such as transparency, risk and ethics, that you can find nicely explained in the document prepared by FG Lawyers.

The potential for digital investing and more in general for the alternative finance market, seems good in the Netherlands. With these new rules things could accelerate further and hopefully we will be able to see some very good results in the months ahead.

In countries like the Netherlands, size is a key concern. We’ve discussed the fragmentation of the European market as an inhibitor to the digital finance markets growth and expect it to continue to as a factor in smaller countries in Europe, outside the majors like the UK. We remain optimistic and call for effective frameworks to facilitate cross border intra-Europe digital finance transactions and see the vast potential for growth if the world’s largest market can act as truly that.

Originally published at

Freelance writer & digital strategist. European Commission expert, Fintech curator at Techstars Startup Digest, SXSW advisory board member.

Freelance writer & digital strategist. European Commission expert, Fintech curator at Techstars Startup Digest, SXSW advisory board member.