Crowdfunding Licence in Lithuania

Unlock the boundless opportunities of the European crowdfunding landscape with our tailored licensing services. Embrace the dynamic world of crowdfunding, where entrepreneurial visions meet eager investors, fostering innovation and growth.

Whether you’re drawn to lending-based platforms, empowering investments and economic ventures, or the diverse realm of investment-based crowdfunding, we offer comprehensive support to navigate the regulatory intricacies.

Submit an application for a Crowdfunding Licence in Lithuania Submit an application

Personal Manager

Your dedicated manager ensures clear communication, facilitating a smooth journey to obtain your crowdfunding license and beyond.

Local Lawyer

Our local lawyers, well-versed in Lithuanian regulations, ensure seamless communication with national institutions.

Comprehensive Market Insights

Our team provides in-depth market research and analysis tailored to the Lithuanian crowdfunding landscape.

At Adam Smith, our legal experts specialize in shepherding you through the rigorous licensing process, ensuring compliance with European regulations while maximizing your potential for success. From meticulous document preparation to adept liaison with the Bank of Lithuania, we provide end-to-end assistance, empowering you to embark on your crowdfunding journey with confidence.

Let’s embark on this regulatory voyage together, unlocking the doors to your crowdfunding dreams. Dive deeper into our services and unleash the power of crowdfunding in Lithuania with Adam Smith by your side.

Understanding Crowdfunding: Empowering Projects Through Collective Support

Crowdfunding represents a revolutionary approach to financing, harnessing the power of collective support to fund projects across various domains. Whether it's individuals, startups, or small to medium-sized enterprises, crowdfunding platforms offer a gateway for them to attract capital from the public, diverging from traditional investment avenues. Contributors to crowdfunding campaigns can receive an array of rewards, ranging from souvenirs to shares in the project, depending on the terms of financing. This inclusive model not only democratizes access to funding but also fosters community engagement and support for innovative endeavors.

Collective fundraising in the European Union signifies more than just a financial instrument; it reflects broader social and economic shifts driven by digitalization and the democratization of financial markets. This movement democratizes access to funding, providing a platform for a diverse range of entrepreneurs and startups to realize their ideas with public support. With the advent of Regulation (EU) 2020/1503, the EU is actively creating a conducive and regulated environment for collective investing, paving the way for further growth and innovation in the crowdfunding sector.

Navigating Crowdfunding Regulation in the EU: A Path to Licensing

The regulatory landscape governing crowdfunding in the EU is evolving rapidly, with stringent requirements outlined in Regulation (EU) 2020/1503. Licensing plays a pivotal role in ensuring transparency, security, and reliability in the crowdfunding ecosystem. It mandates that crowdfunding platforms adhere to strict standards in 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 fostering trust among investors and entrepreneurs alike.

Why Choose Lithuania for Crowdfunding Licensing?

Lithuania stands out as a prime destination for obtaining crowdfunding licenses amidst the European landscape. The recent adoption of the European Crowdfunding Service Provider Regulation (ECSPR) has harmonized and streamlined crowdfunding rules across the EU, offering seamless passporting opportunities within a vast single market. However, Lithuania distinguishes itself with its robust regulatory frameworks tailored to govern crowdfunding activities, ensuring investor protection and market integrity. With a conducive regulatory environment and a commitment to financial innovation, Lithuania provides a fertile ground for aspiring crowdfunding service providers to thrive and expand their operations within the European Union.

Navigating the regulatory requirements and application process for crowdfunding licensing in Lithuania demands meticulous attention to detail and comprehensive preparation. From company registration to the submission of a thorough application to the Bank of Lithuania, firms must adhere to a series of stringent criteria outlined in the ECSPR.

Securing a crowdfunding license in Lithuania not only signifies regulatory compliance but also unlocks a plethora of opportunities for firms aiming to revolutionize the financial landscape:

Lending-Based Crowdfunding: Empowering Investments

One significant avenue for crowdfunding firms lies in lending-based platforms. Through our licensing support, your firm can facilitate loans between investors and project owners, enabling the realization of various ventures. Project owners commit to repaying investors, along with accrued interest, following an agreed-upon instalment schedule. This model not only fosters financial inclusion but also stimulates economic growth by providing alternative funding sources for projects.

Investment-Based Crowdfunding: Bridging Opportunities

Another avenue ripe with potential is investment-based crowdfunding, where firms act as mediators in the sale of transferable securities and related instruments on the public market. With our legal expertise, your firm can navigate the regulatory landscape and offer diverse investment opportunities to a broad range of investors. This model enhances market liquidity and democratizes access to investment opportunities, fueling innovation and entrepreneurship.

Beyond the core crowdfunding models, obtaining a license opens doors to a range of ancillary services:

Asset Safekeeping

Ensure the security of investors’ assets with robust asset safekeeping solutions, fostering trust and confidence in your platform.

Payment Services

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

Use of Special Purpose Vehicles

Harness the flexibility of special purpose vehicles to structure complex crowdfunding deals, optimizing risk management and regulatory compliance.

Application of Credit Scores

Utilize sophisticated credit scoring mechanisms to assess project viability and enhance investment decision-making processes, mitigating risks and maximizing returns.

Suggestion of Pricing and Interest Rates

Provide valuable insights into pricing and interest rates, empowering investors to make informed decisions and optimizing capital allocation.

Operating Bulletin Boards

Foster a vibrant community of investors and project owners through interactive bulletin boards, facilitating transparent communication and knowledge sharing.

Establishing Contingency Funds

Safeguard against unforeseen events and market fluctuations by establishing contingency funds, ensuring the resilience and sustainability of your crowdfunding platform.

Cost and terms of obtaining a Crowdfunding license in Lithuania

Stage 1: Strategy Development and Licencing Assessment - 1 900 EUR

Extensive business consulting services including analysis of business model, risk assessment, compliance evaluation, review of necessary documents, customized plan/strategy.

Stage 2: Pre-Licensing with Company Registration - 7 800 EUR

Assistance in establishing a company in Lithuania, corporate account opening, preparation of supplementary documents, solutions for specialist hiring and office renting, etc.

Stage 3: Licensing and Post-Licensing - 4 900 EUR

Submission of application to the Bank of Lithuania, communication with the regulator, assistance until license is obtained, post-licensing compliance evaluation.

Unlocking Your Crowdfunding Potential: Licensing Services

Embarking on a crowdfunding venture in Lithuania offers immense opportunities for entrepreneurs and investors alike. However, navigating the regulatory landscape can be complex and challenging. That's where we come in, we specialize in providing comprehensive licensing services tailored to your needs, ensuring a smooth and successful journey from application to approval. Understanding Crowdfunding Licensing Requirements To obtain a crowdfunding license in Lithuania, firms must adhere to specific requirements outlined by Regulation (EU) 2020/1503. These requirements include:

Initial Capital Requirements: Crowdfunding service providers must demonstrate prudent financial safeguards, including an initial capital of at least 25,000 EUR + part of the expected profits for upcoming years. 
Staff Requirements: Key personnel responsible for managing the crowdfunding service provider must possess good repute, sufficient knowledge, skills, and experience. This ensures the integrity and reliability of the platform. 
Physical Office: While a physical office in the Member State of license issuance is mandatory, it is not required for activities in other Member States, offering operational flexibility. 
Operational Protocols: Firms must establish robust governance structures, internal control mechanisms, and risk management procedures to ensure compliance with regulatory standards.

The application process involves several steps:

Company Registration: Firms must register their company and deposit adequate capital into a bank account. 
Document Preparation: Comprehensive documentation, including legal forms of incorporation, governance arrangements, and operational protocols, must be prepared for submission. 
Submission to the Bank of Lithuania: The completed application, along with supporting documents, is submitted to the Bank of Lithuania for evaluation. While there is a 25-working-day evaluation period, the process may extend over several months until the bank is satisfied with the application.
 Further Evaluation: Upon acceptance of the application, the Bank of Lithuania conducts a further substantial evaluation before issuing the license, ensuring compliance with regulatory standards.

Why Choose Us?

At Adam Smith, we understand the complexities of the crowdfunding licensing process. Contact us today to learn more about our licensing services and how we can support your venture every step of the way. Let's turn your crowdfunding aspirations into reality together.

Frequently Asked Questions (FAQs) About Crowdfunding Licensing

What is the minimum initial capital required for obtaining a crowdfunding license in Lithuania?

The minimum initial capital requirement is 25,000 EUR of own funds, plus a portion of expected profit/loss. Alternatively, an insurance policy covering the required sum can be sufficient.

What are the staff requirements for managing a prospective crowdfunding service provider?

The staff responsible for management must be natural persons of good repute, possessing sufficient knowledge, skills, and experience, including knowledge of Lithuanian language.

Is a physical office required for activities outside the Member State of license issuance?

No, a physical office is only required in the Member State where the license is issued.

How long does the application process take?

While there is a 25-working-day evaluation period, the process can extend over several months until 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 evaluates the completeness of the application and supporting documents within a 25-working-day period. Once accepted, further substantial evaluation is conducted before issuing the license, ensuring compliance with regulatory standards.

What types of crowdfunding are regulated under this license?

The license covers both equity and debt-based crowdfunding platforms. This includes platforms facilitating the exchange of shares in startups or established businesses, as well as those arranging loans for businesses.

Can foreign entities apply for a crowdfunding license in Lithuania?

Yes, foreign entities can apply for a crowdfunding license in Lithuania, provided they establish a branch or representative office within the country to handle local operations and compliance.

What are the ongoing reporting requirements for a licensed crowdfunding platform?

Licensed platforms must submit annual reports to the Bank of Lithuania, detailing financial performance, adherence to regulatory requirements, and any significant changes in their operations or management.

Is there a requirement for an external audit?

Yes, an external audit is required annually. Crowdfunding platforms must have their financial statements audited by an accredited auditor to ensure transparency and compliance with financial regulations.

What consumer protection measures are required for crowdfunding platforms?

Platforms are required to implement measures that ensure transparent communication, fair treatment of investors, and the protection of personal and financial data according to GDPR regulations.

How are complaints handled by crowdfunding platforms?

Crowdfunding platforms must have a clear and accessible procedure for handling complaints. They need to respond to complaints within a reasonable time frame and must also report the nature and frequency of complaints to the regulator annually.

What happens if a crowdfunding platform fails to comply with licensing requirements?

Non-compliance can result in penalties such as fines, suspension of activities, or revocation of the license, depending on the severity of the breach.

Can a crowdfunding license be revoked?

Yes, the Bank of Lithuania has the authority to revoke a crowdfunding license if the platform repeatedly fails to comply with regulatory requirements or if it provides false information during the application process.

Are there specific advertising guidelines for crowdfunding platforms?

Yes, all advertising by crowdfunding platforms must be clear, not misleading, and must provide potential investors with a balanced view of potential risks and rewards.

What kind of financial records must be maintained by the crowdfunding platform?

Platforms must maintain comprehensive records of all transactions, financial statements, contracts, and communications with investors for a minimum period of five years.

Are there restrictions on the type of projects that can be crowdfunded?

The regulations typically do not restrict the types of projects that can be crowdfunded, but platforms are required to conduct due diligence to ensure the legitimacy and legal compliance of the projects listed.

What due diligence is required from the crowdfunding platform on project initiators?

Platforms are required to verify the identity, background, and financial health of project initiators to prevent fraud and ensure the integrity of the platform.

Can a license be transferred to another company?

No, crowdfunding licenses are non-transferable. Any new entity wishing to operate a crowdfunding platform must apply for its own license.

What training is required for the staff of a crowdfunding platform?

Staff members, especially those dealing with compliance and investor relations, must undergo regular training on the latest regulatory developments, risk management, and ethical standards.