I- General Information
Crowdfunding is an alternative financing method where individuals unite to support various projects, often via online platforms. Key elements include:
- A group of individuals cooperating to fund a specific project.
- A financing goal.
- Use of technology to connect individuals and facilitate contributions, reducing reliance on large investors or traditional financial institutions.
Types of crowdfunding:
- Crowd-sponsoring (donation): Individuals donate money without expecting anything in return.
- Crowd-investing (equity crowdfunding): Participants invest in projects or companies, often receiving shares or participation in return.
- Crowd-lending: Connects credit seekers with people willing to lend money.
II- Regulation in Costa Rica
While crowdfunding is internationally recognized and regulated in some countries, including several in Latin America, Costa Rica currently lacks specific laws or regulations. However, sectoral norms apply to similar conventional activities.
The Organic Law of the Central Bank of Costa Rica (Art. 116) defines financial intermediation as collecting public money to lend or invest, requiring authorization from a bank or financial entity. Proper structuring of crowd-lending is crucial to avoid unauthorized intermediation.
Securities market regulations, particularly the Public Offering of Securities Regulations, define securities and investment contracts related to crowd-investing. Private investment collection is allowed without public advertising or involving more than fifty investors. Public offers require registration with the General Superintendence of Securities (SUGEVAL), making it a securities issue rather than crowdfunding.
Crowd-sponsoring can involve donations (unregulated) or pre-purchase of products (consumer protection impact). Crowd-lending, absent financial intermediation, involves credit between participants without third-party risk assumption, which is feasible under current regulations as it is not considered a securities transaction.
Risk prevention of money laundering and terrorist financing is essential across all crowdfunding types, requiring compliance with Articles 15 and 15 bis of Law No. 7786 and related regulations.
Implementing a crowdfunding scheme requires a viable business design, compliance with applicable regulations, and robust contracts and mechanisms for proper operation.
III- Crowdfunding Law Project
The Costa Rican Legislative Assembly is currently reviewing Bill No. 23,827, formally titled “Law on Collaborative Financing Platforms,” aimed at regulating and enabling crowd-investing or equity crowdfunding. Other crowdfunding types are not covered.
The bill proposes creating regulated entities known as “collaborative financing platforms,” which will be exclusive-purpose corporations or foreign branch offices authorized and supervised by SUGEVAL. These entities must meet minimum capital and technical requirements, select and publish projects, facilitate information and transactions, and safeguard resources and financing securities.
Platforms must operate honestly, professionally, and transparently, ensuring information and resource security, managing conflicts of interest, and complying with anti-money laundering and counter-terrorism financing regulations. They are prohibited from discretionary investment management, granting credits or loans, making personalized recommendations, guaranteeing returns, or participating as recipients or investors in published projects.
Investment recipients must be corporations developing productive projects in Costa Rica, providing truthful and complete information. Investors, assuming investment risks and obligations, can be individuals or entities. Collaborative financing securities can be debt or equity, exclusively issued and traded through authorized platforms.
The National Council for the Supervision of the Financial System (CONASSIF) will issue crowdfunding regulations and sanctions. SUGEVAL will authorize, supervise, and sanction platforms, publicly communicating relevant information. Infractions are categorized as very serious, serious, or minor, with penalties including license revocation.
The bill aims to facilitate crowd-investing under a simpler, less costly regulatory framework than public securities offerings, suitable for small businesses and new projects while ensuring investor protection and anti-money laundering measures. This initiative supports the analysis of regulating crowdfunding in Costa Rica, promoting more and better financing opportunities with greater legal security.