LAW FIRM TVINS

Jogailos str. 4, LT-01116 Vilnius

REGULATION OF CROWDFUNDING IN LITHUANIA

General requirements
1. A legal entity (though sometimes without such status) may be an operator of a crowdfunding platform.
The operator of a crowdfunding platform must be domiciled in the Republic of Lithuania, save for the
cases where entities established in other Member States in accordance with the legal acts are entitled to
act as intermediaries in forming transactions for financing without having registered their domicile in
the Republic of Lithuania or with their branches established in the Republic of Lithuania.
2. Both natural persons and legal entities can be project owners and the parties financing projects
(investors).
3. A project using crowdfunding should be intended to meet business, professional, science, research and
other needs except for consumption.
4. Funds can be granted to the project owner in the following forms:
as a loan or other monetary form, or
by acquisition of financial instruments issued by the project owner.
5. Such regulation of crowdfunding does not apply to crowdfunding based on non-financial
consideration/incentives (donation and reward crowdfunding).
Requirements for start of crowdfunding activities
6. The operator has the right to engage in such activities after the operator is included in the public list of
crowdfunding platform operators.
7. When applying to the supervisory authority for inclusion in the public list of crowdfunding platform
operators, the following must be submitted:
a request to be included in the list;
documents and information on members and managers (heads) of the platform operator;
information on meeting prudential requirements (requirements for its capital);
a description of a business model of the crowdfunding platform;
rules for assessment of project owners credibility (soundness);
a plan of ongoing concern.
8. In general the supervisory authority makes a decision regarding inclusion in the list within 30 business
days. This time limit may be extended if the supervisory authority requests additional documents or
instructs to eliminate the identified shortcomings. The supervisory authority is the Bank of Lithuania.
9. The operator must also prepare the following information and documents:
the information on investment-related risks by providing their descriptions;
the information on organisational and administrative measures in place to prevent conflicts of
interest;
a description of the procedure for using the crowdfunding platform;
rules for secondary trading in the crowdfunding platform provided the platform operator intends to
engage in secondary trading;
the method of calculating the remuneration for the operator of crowdfunding platform paid by
project owners and project investors;
the information on taxes applicable to a financing transaction and types of such taxes;
the terms and procedure of funds repayment to investors in the event the project owner does not
raise a sufficient amount to develop the project;
the information on risk mitigation measures, if any;
rules for handling complaints of customers;
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the procedure for implementing rights of a personal data subject.

10. The above-listed information and documents must be published on the website of the operator.
Prudential requirements for the crowdfunding platform operator (requirements for its capital)
11. Throughout its term of operation, the platform operator must meet at least one of these conditions:
its equity must not be less than the greater of the following:
EUR 40,000;
the calculated own capital requirement which constitutes 0.2 per cent of the amounts financed
through the crowdfunding platform and not yet repaid to investors;
or
the platform operator must have a suretyship or guarantee document issued by an insurance
company or financial institution for not less than EUR 100,000 per claim of investors to indemnify
their losses, and EUR 500,000 for all claims of investors to indemnify their losses per year.
Requirements for provision of crowdfunding services
12. Restrictions for the maximum amount to be invested do not apply to investors.
13. Before providing an opportunity for a investor to enter into a financing transaction of specific type
(investment or lending) for the first time, the platform operator must carry out assessment of
acceptability of the specific type of financing transaction for that investor.
14. When assessing the acceptability of the financing transaction for the investor, the platform operator
must request from the investor to provide information on his knowledge and experience in the area of
investments related to the type of anticipated financing transaction. Taking due account of the
information provided by the investor, the platform operator must evaluate whether the specific type of
financing transaction is acceptable to the investor.
15. If the assessment of acceptability of the type of financing transaction to the investor reveals that a certain
type of financing transaction is not acceptable to the investor, or if the investor refuses to provide
information about his knowledge and experience in the area of investments or provides insufficient
information, the platform operator may allow the investor entering into the financing transaction but
must:

warn the investor that the type of financing transaction is not acceptable to the investor, or that nonprovision of the required information prevents from determining whether the type of financing
transaction is suitable to the investor;
to provide the investor with the information on investment-related risks.

16. The requirements listed above do not apply in the event the investor is an informed investor.
17. The platform operator provides crowdfunding platform services to the investor and the project owner
on the basis of an agreement for services of the crowdfunding platform operator signed with each of
them. If it is stipulated in the agreement, the platform operator has the right on behalf of the investor to
take actions related to representing the investor and defending his interests at courts, voting at general
meetings of shareholders of the project owner in accordance with the shareholders (investorrs)
instructions, also in other dealings with the project owner, state institutions, and to exercise the pledgees
rights. The agreement may also provide for the platform operators right to assign such functions to
another person.
Conditions of raising funds through crowdfunding
18. No additional requirements related to raising funds apply to a financing transaction which is intended
to raise an amount less than EUR 100,000 in 12 months.
19. The project owner wishing to enter into one or more financing transactions for the total amount ranging
from EUR 100,000 up to 5 million euros in 12 months must draft a document specifying the information
about the project owner and the proposed project, and submit it to the platform operator.
20. The project owner wishing to enter into one or more financing transactions for the total amount of
5 million euros or more in 12 months can do so only by issuing securities in the manner established by
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the Law on Securities, i.e. by preparing a prospectus, and after obtaining an approval of the supervisory
authority.
21. The project owner is not obligated to allocate its own funds to finance the project.
Other aspects of regulation
22. Supervisory authority Bank of Lithuania.
23. Supervisory authority may impose a fine amounting to 2 per cent of aggregate annual income for taking
actions or pursuing activities prohibited by the legal acts, or for other violations.
24. The above-described regulation of crowdfunding will come into force from 1 December 2016 (bank of
Lithuania will draft implementing acts by 30 November 2016).

Disclaimer:
The information provided herein is meant for information only in order to present the future regulation in the
Republic of Lithuania. The information contained in this document is not a legal advice, and cannot be relied
on as such; also it may be changed at any time without notice. Law firm TVINS does not accept liability for
any losses incurred by a person acting in reliance on the information specified in this document.
For additional information please contact:
Vytautas enaviius
Partner, attorney-at-law
Law firm TVINS
Jogailos g. 4, Vilnius
Phone +370 670 04 194
E-mail vytautas.senavicius@tvinslaw.com
Web www.tvinslaw.com