(r) contingency arrangements the Authorised Crowdfunding Platform has in place to ensure the orderly administration of Permitted Loans if it ceases to carry on business.
(2) For the purposes of (1), «significant influence» refers to the ability to participate in, direct, or otherwise control the operating decisions of an entity. The existence of significant influence may be evidence in one or more of the following ways:
(a) representation on the board of directors or equivalent governing body of the entity;
(b) participation in the policy or decision making process of the entity;
(c) material transactions between the entity and the person with influence;
(d) changes to managerial personnel directed by the person with influence; or
(e) the provision of otherwise sensitive information to the person with influence.
(3) An Authorised Crowdfunding Platform must make available on its website one or more interactive educational tools which are reasonably designed to promote lender understanding of the services offered by the Authorised Crowdfunding Platform, as further described in (1), and of the key risks of using these services, as further described in 7.3.2.
7.3.5 Risk acknowledgement form
(1) An Authorised Crowdfunding Platform must ensure that a Retail Lender or Retail Investor provides a signed risk acknowledgement form for each Permitted Loan or Permitted Investment (as applicable) that it makes using the platform.
(2) The risk acknowledgement form under (1) must:
(a) set out clearly the risks referred to in AMI 7.3.2, 7.3.4;
(b) require the Retail Lender or Retail Investor to confirm that they understand those risks; and
(c) be provided before, or at the same time as, the Retail Lender or Retail Investor commits to making the Permitted Loan or Permitted Investment (as applicable).
7.3.6 Due diligence on Borrowers or Issuers
(1) An Authorised Crowdfunding Platform must not permit a Borrower or Issuer to use its service unless the Borrower or Issuer is a Body Corporate.
(2) An Authorised Crowdfunding Platform must conduct due diligence on each Borrower or Issuer before allowing it to use its service.
(3) The due diligence under (2) must include, as a minimum, taking reasonable steps to verify in relation to the Borrower or Issuer (as applicable):
(a) its identity, including details of its incorporation and business registration; and
(b) the identity and place of domicile of each of its Directors, officers and Controllers.
(4) The AFSA may by written notice, require an Authorised Crowdfunding Platform to conduct additional due diligence on Borrowers and/or Issuers before such Borrowers and/or Issuers are permitted to use the service provided by the Authorised Crowdfunding Platform.
7.3.7 Disclosure of information about the Borrower or Issuer
(1) An Authorised Crowdfunding Platform must disclose prominently on its website relevant information about each Borrower or Issuer, including as a minimum:
(a) the name of the Borrower or Issuer, the full name and position of each of its Directors and officers and the full name of each Controller;
(b) the place of incorporation of the Borrower or Issuer and the place of domicile of each Director, officer and Controller;
(c) a description of the Borrower or Issuer's business;
(d) a detailed description of the proposal for which it is seeking funding including:
(і) the target level of funding sought and what will happen if that level is not met or is exceeded; and
(ii) how the funds will be used.
(e) the results of any due diligence carried out by the Authorised Crowdfunding Platform on the Borrower or Issuer and any limits on the due diligence that could be carried out;
(f) the grading or rating by the Authorised Crowdfunding Platform of the Borrower or Issuer's creditworthiness (if any), including:
(і) how the grading or rating has been assessed;
(ii) an explanation of what the different grading or rating levels mean; and
(iii) a clear statement that this should not be taken as advice about whether money should be lent to the Borrower or an Investment should be made with the Issuer;
(g) that the Borrower or Issuer, and information provided about the Borrower or Issuer, are not checked or approved by the AFSA; and
(h) other disclosure documents that contain the necessary information which is material to Retail Investors or Retail Lenders for making an informed investment decision.
(2) The disclosures referred to in (1) must be presented in a way that is fair, clear and not misleading.
7.3.8 Disclosure of information about the Permitted Loan or Permitted Investment
(1) An Authorised Crowdfunding Platform must disclose prominently on its website relevant information about each Permitted Loan or Permitted Investment offered by a Borrower (as applicable), including as a minimum:
(a) for a Permitted Loan, the duration of the Permitted Loan, details of interest payable and any other rights attaching to the Permitted Loan;
(b) for an issue of Permitted Investments, any rights attaching to the Permitted Investments, such as a dividend, voting or pre-emption rights;
(c) whether any security is being provided and, if so, the details of that security including the circumstances in which it might be exercised and any limitations on its use;
(d) for a Permitted Loan, if applicable, any other reward or benefit attaching to the Permitted Loan and the terms on which it is available; and
(e) for an issue of Permitted Investments, whether Investors have any protection from their interest or holding being diluted by the issue of further Permitted Investments.
(2) The disclosures referred to in (1) must be presented in a way that is fair, clear and not misleading.
7.3.9 Proposals not to be advertised outside platform
(1) An Authorised Crowdfunding Platform must:
(a) not advertise a specific lending or Investment proposal that is available on the Authorised Crowdfunding Platform; and
(b) take reasonable steps to ensure that Borrowers or Issuers that use the Authorised Crowdfunding Platform do not advertise the lending or Investment proposal,
unless the advertisement is made on the platform and is accessible only to existing Clients who use the Authorised Crowdfunding Platform.
7.3.10 Material changes affecting a Borrower or Issuer
(1) This Rule applies if, in the reasonable opinion of an Authorised Crowdfunding Platform, a material change occurs relating to a Borrower or Issuer, its business, its proposal or the carrying out of its proposal.
(2) In this Rule, a «material change» means any change or new matter that may significantly affect the Borrower or Issuer's ability to meet its payment obligations under the loan agreement or its ability to carry out its proposal.
(3) If the material change occurs during the Commitment Period, an Authorised Crowdfunding Platform must:
(a) notify committed lenders or Investors of the material change and require them to reconfirm their commitment within 5 business days; and
(b) if reconfirmation is not provided within the period specified in (a), cancel the commitment.
(4) If the material change occurs after the Commitment Period, an Authorised Crowdfunding Platform must disclose prominently on its website:
(a) details of the material change;
(b) any change in the rights of the lenders and the Borrower, or the Investors and Issuer, arising from the material change; and
(c) what steps, if any, the operator is proposing to take as a result of the change.
(5) A disclosure or notification under (3) or (4) must be made as soon as practicable after the Authorised Crowdfunding Platform becomes aware of the material change.
7.3.11 Borrower or Issuer use of other platforms
(1) An Authorised Crowdfunding Platform must:
(a) take reasonable steps to identify where a Borrower or Issuer is seeking, or proposes to seek, funding on another Authorised Crowdfunding Platform during the Commitment Period; and
(b) where it identifies that a Borrower or Issuer is seeking, or proposes to seek, funding on another Authorised Crowdfunding Platform during the Commitment Period, disclose this fact to lenders or Investors.
7.3.12 Equal treatment of lenders or Investors
(1) An Authorised Crowdfunding Platform must ensure that lenders or Investors who use its service are able to have access to the same information on its website about a Borrower or a lending proposal or an Issuer or an Investment proposal, and that access to the information is provided at the same time.
(2) If an Authorised Crowdfunding Platform provides an auto-lending or auto-investment system, or any other facility that provides some lenders or Investors with the opportunity to lend money ahead of other lenders or Investors, it must disclose prominently on its website that some lenders or Investors may have preferential access to alternative proposals or terms.
7.3.13 No suitability disclosure
(1) If an Authorised Crowdfunding Platform provides an auto-lending or auto-investment system it must disclose prominently to lenders or Investors who use the facility that no assessment is made that any Permitted Loan or Permitted Investment selected by the system is suitable for the lender or Investor.
7.3.14 An Authorised Crowdfunding Platform not to permit staff to use the platform
(1) An Authorised Crowdfunding Platform must take reasonable steps to ensure that its officers, employees, their Family Members and any Related Persons do not:
(a) lend money or provide finance to a Borrower or Issuer;
(b) borrow money from a lender or receive funding from an Investor; or
(c) hold any direct or indirect interest in the capital or voting rights of a Borrower or lender or an Issuer or Investor.
(1) If an Authorised Crowdfunding Platform provides a means of communication (a «forum») for Borrowers and lenders or Issuers and Investors to discuss funding proposals made using the service, it must:
(a) refer lenders or Investors to the forum as a place where they can find, or take part in, further discussion about proposals, while clearly stating that the Authorised Crowdfunding Platform does not conduct due diligence on information on the forum;
(b) restrict posting of comments on the forum to Persons who are Clients using the service;
(c) ensure that all Clients using the forum have equal access to information posted on the forum;
(d) require a Person posting a comment on the forum to disclose clearly if he is affiliated in any way with a Borrower or Issuer or is being compensated, directly or indirectly, to promote a proposal by a Borrower or Issuer;
(e) take reasonable steps to monitor and prevent posts on the forum that are potentially misleading or fraudulent;
(f) immediately take steps to remove a post, or to require a post to be deleted or amended, if an Authorised Crowdfunding Platform becomes aware that (d) or (e) have not been complied with; and
(g) not participate in discussions on the forum except to moderate posts or to take steps referred to in (f).
7.3.16 Facility for transfer of Permitted Loans or Permitted Investments
(1) If an Authorised Crowdfunding Platform provides a facility that assists the transfer of rights or obligations under a Permitted Loan or the sale of Permitted Investments, it must ensure that (as applicable):
(a) the facility relates only to Permitted Loans or Permitted Investments originally facilitated using its service;
(b) transfers can take place only between lenders or Investors who are already Clients using the service and have initially lent money under a Permitted Loan or initially subscribed for Permitted Investments using the service;
(c) in the case of a Permitted Loan, the facility allows only a lender (and not the Borrower) to transfer rights and obligations under the agreement;
(d) in the case of a Permitted Loan, a lender must transfer the rights and obligations relating to the whole of a Permitted Loan made (and not just a part of the Permitted Loan);
(e) potential transferees or buyers have access to all information on the website about the Borrower or Issuer that was available to earlier lenders; and
(f) fees it charges for the use of the facility are designed to recover its costs of providing the facility, rather than generating additional income.
7.3.17 Business cessation plan
(1) An Authorised Crowdfunding Platform must:
(a) maintain a business cessation plan that sets out appropriate contingency arrangements to ensure the orderly administration of Permitted Loans in the event that it ceases to carry on its business (including details of how any Loan Administrator, administrator and/or nominee company will continue to operate following the cessation of business); and
(b) ensure, as far as reasonably practicable, that the contingency arrangements can be implemented if necessary.
7.3.18 AFSA power to impose a prohibition or requirement
(1) The AFSA may prohibit an Authorised Crowdfunding Platform from:
(a) entering into certain specified transactions or agreements or types of transactions or agreements; or
(b) outsourcing any of its functions or activities to a third party.
(2) The AFSA may, by written notice or guidance, set fees payable by an Authorised Crowdfunding Platforms to the AFSA on certain specified transactions or types of transactions.
(1) An Authorised Crowdfunding Platform shall establish and maintain written policies and procedures to resolve complaints made against it or other parties (including Clients) in a fair and timely manner.
(2) An Authorised Crowdfunding Platform must provide, in a clear and conspicuous manner: on its website or websites; in all physical locations; and in any other location the AFSA may prescribe, the following disclosures:
(a) the mailing address, email address and telephone number for the receipt of complaints;
(b) a statement that the complainant may also bring his or her complaint to the attention of the AFSA;
(c) the AFSA's mailing address, website and telephone number; and
(d) such other information as the AFSA may require.
(3) An Authorised Crowdfunding Platform shall report to the AFSA any change in its complaints policies or procedures within ten days of such change being made.
(4) An Authorised Crowdfunding Platform must maintain a record of any complaint made against it or other parties (including Clients) for a minimum period of six years from the date of receipt of the complaint.
7.3.20 Obligation to report transactions
(1) An Authorised Crowdfunding Platform shall report to the AFSA details of transactions which are executed through its platform.
(2) The AFSA may, by written notice or Guidance, specify:
(a) the information to be included in reports made under (1); and
(b) the manner in which such reports are to be made.
(1) An Authorised Crowdfunding Platform must ensure that lenders or Investors who have committed to providing funding to a particular Borrower or purchasing an Permitted Investment or Permitted Loan from a particular Issuer or Borrower may withdraw that commitment, without any penalty and without giving a reason, during the cooling-off period.
(2) In (1), «cooling-off period» means the period of at least 48 hours starting at the end of the Commitment Period.
(1) An Authorised Crowdfunding Platform must ensure that all loan proceeds are only provided to the Borrower or offering proceeds are only provided to the Investor when the aggregate capital raised from all lenders or Investors is equal to or greater than the target funding amount and allow all lenders or Investors to cancel their commitments to lend or invest, as the AFSA shall determine appropriate.
7.3.23 Lending and Investment limits
(1) An Authorised Crowdfunding Platform must maintain effective systems and controls to ensure that a Retail Lender or Retail Investor using its service does not lend or Invest, in respect of any single Borrower or Issuer and in aggregate calculated over a period of 12 months, an amount which exceeds the greater of:
(a) USD 2,000; or
(b) the lesser of
(і) 10 percent of the annual income; or
(ii) 5 percent of net worth of such Retail Lender or Retail Investor (excluding the value of the primary residence), up to a maximum aggregate amount of USD100,000.
(1) An Authorised Crowdfunding Platform must maintain effective systems and controls to ensure that:
(a) a Borrower does not borrow from:
(і) Retail Lenders more than USD 5,000,000 in total; and
(ii) Accredited Lenders more than USD 50,000,000 in total; and/or
(b) the total aggregate consideration for the Permitted Investments offered by an Issuer to:
(і) Retail Investors using its service is USD 5,000,000 or less; and
(ii) Accredited Investors using its service is USD 50,000,000 or less;
or an equivalent amount in another currency, calculated over a period of 12 months.
(1) The issue of Permitted Investments or Debentures may result in the application of requirements under the Markets Rules (MAR) such as Market Abuse provisions or, if an offer is not an Exempt Offer or offer of Securities by way of placement, Prospectus requirements.
7.4. Additional Requirements for Loan Crowdfunding Platforms
(1) A Loan Crowdfunding Platform must ensure that, when a Permitted Loan is made using its service, there is a written loan agreement in place between the Borrower and lender that is legally enforceable and sets out sufficient details of the loan, the terms of repayment and the rights and obligations of the Borrower and lender.
(1) A Loan Crowdfunding Platform must have in place arrangements to administer the collection of amounts due and payable under a Permitted Loan.
(2) The arrangements in (1) shall include procedures for taking steps to collect overdue amounts and/or enforce a Permitted Loan in default on behalf of lenders including such steps as are necessary to enforce any security or apply any collateral that the Borrower may have provided in connection with the Permitted Loan;
(3) The arrangements in (1) may be carried out by the Loan Crowdfunding Platform by itself or by such other Person as the Loan Crowdfunding Platform may appoint (a «Loan Administrator»).