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By Companisto

New Act on the Protection of Small Investors Now Effective – Changes for Companists


Dear Companists,

To improve protection of small investors, the German federal government decided in 2014 to amend the German act on capital investment [Vermögensanlagengesetz; VermAnlG]. On 23 April 2015, the German parliament passed the act on the protection of small investors; on 9 July 2015, the act was published in the German Federal Gazette no. 28 and thus became effective. We had already summarized the changes due to this law in an earlier update.

Prior to the passage of the act, Companisto participated in an expert hearing by the German parliament and represented the still young German equity crowdfunding industry. There are some exemptions for equity crowdfunding in the act that we will explain below.

On the whole, Companisto considers the act on the protection of small investors positive because investor protection is also a key issue for us. Indeed, only if there is sufficient transparency and trustworthiness will equity crowdfunding establish itself as a way of financing for innovative start-ups in Germany in the long term.

The provisions of the act on the protection of small investors apply to financing rounds started after 9 July 2015.


Here's what is going to change for Companists, start-ups, and Companisto in the future

Exemption from obligation to provide a prospectus: Companists on Companisto invest through subordinated profit-participating loans [partiarische Nachrangdarlehen]. Normally, providers of subordinated profit-participating loans in Germany are now required to provide a prospectus. The act, however, includes an important exemption for crowdfunding: Projects intending to raise €2.5m or less are not required to prepare a prospectus. The initial draft of the act still included an obligation to provide an investment prospectus for total investment amounts of €1m or more, which would have cost several ten thousand euros.


Investment information sheet: For future financing rounds, companies have to prepare an investment information sheet and make it available to crowdfunding investors. This investment information sheet summarizes the most important information about the investment and its risks. If investors make an investment in a start-up, they now have to confirm that they have acknowledged the risk warning on the investment information sheet.

For the same reason, investors now also have to provide additional information, for instance their place of birth and their ID card number. Investors may accept the investment information sheet online. The initial draft of the act, on the other, still required investors to mail this information sheet to the crowdfunding platform. In the future, the investment information sheet will be available in the public company profile together with the investment contracts.


Maximum Investment: Companists who want to invest more than €1,000 now have to confirm that they own free assets of at least €100,000 or that they are not investing more than twice their net monthly income. However, they have to provide neither more detail about their assets and income nor submit proof of the information they submit. In other words, it will be sufficient if investors state that they own the required assets or have the required income. Those who invest €1,000 or less do not have to provide any such information.

The maximum investment for private individuals is €10,000 unless these people invest in a start-up through a joint-stock company. Consequently, joint-stock companies may still invest an amount of their choice, regardless of the assets available to them.


Mandatory right to cancel: In accordance with the act on the protection of small investors, investors now have the right to cancel their investment within 14 days. On Companisto, this has always been the case.

If you have any questions on the things that have changed because of the act on the protection of small investors, do not hesitate to contact us!

Best regards,
The Companisto team


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