Regulation of Crowdfunding in Germany

Tröger, Tobias H.

doi:10.1007/978-3-030-79264-0_3

Regulation of Crowdfunding in Germany

Tobias H. Tröger¹³

Conference paper
First Online: 06 November 2021

194 Accesses

Part of the Ius Comparatum - Global Studies in Comparative Law book series (GSCL,volume 55)

Abstract

There is no specific German legislation or regulation, as at the date of this study, which specifically address and regulate crowdfunding activities. One should nevertheless acknowledge the rapid growth of the crowdfunding market and observe the new forms of legal relationships resulting from fund raising campaigns conducted through the means of internet platforms. This study thus aims to highlight the main legal issues raised by the conduct of crowdfunding activities in Germany by confronting such activities with the legal framework currently in force in Germany.

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Notes

1.
For proposals that seek to hedge financial stability against regulatory arbitrage without sacrificing the efficiency enhancing potential of financial innovation, Posner and Weyl (2013) arguing for pre-screening of financial innovations through a Federal Drug Authority like agency. See also Tröger (2016) showing how a normative approach to law enforcement allowed existing prudential regulation to capture regulatory arbitrage. For an overview of the regulatory challenges non-bank banks pose with regard to systemic risk, see Wymeersch (2017).
2.
The extent to which allocation of resources occurs in a hierarchy (firm) depends on the transaction costs incurred in equivalent market transactions, for the fundamental insight, see Coase (1937); for a review of the literature carrying forward the theory of the firm see Furubotn and Richter (2005). With regard to financial intermediation this means that market based solutions should become more prominent once the comparative advantages of intermediation within a big entity shrink, which is particularly the case if search costs are lowered as a function of technological improvements.
3.
The early literature points to crowdinvesting’s potential to allow firms to receive financing from an additional source that complements bank and venture capital funding, as argued by Pope (2011), Heminway and Hoffman (2011), or Bradford (2012). For an account in the business press that envisions a far-reaching substitution of banks as providers of credit, see the editorial of The Economist, dated 1 Mar 2014, and titled ‘Banking without banks’, at 70; for a delineation of crowdinvesting’s potential in Europe, see Zetzsche and Preiner (2017); for Germany for instance, see Meschkowski and Wilhelmi (2013); specifically on the idea of a relative decrease in the costs of capital as a result of lower search and agency costs in crowdinvesting relationships, see Klöhn and Hornuf (2012) arguing that the ‘wisdom of crowds’ is imperfect and partly irrelevant with regard to relevant agency relationships.
4.
For an overview of the policy issues, see Armour and Enriques (2017); see also Zetzsche and Preiner (2017) at 9–16. The European Securities and Markets Authority (ESMA) has also identified what it considers key components for an adequate regulatory reaction to the new phenomenon and outlined several specific responses that draw-on and develop the existing EU regulatory framework, referred to as ESMA, Opinion: Investment Based Crowdfunding, at 10–12 and at 12–27.
5.
But see Dorfleitner and Hornuf (2016) presenting aggregate data for the donation based and reward based crowdfunding markets that includes campaigns initiated by Germans on international platforms and showing that the overall funding capacity—EUR 85 million between 2007 and 2015—is small relative to other crowdfunding markets and dominated by three players, although sourcing occurs through a large number of intermediaries.
6.
For older data see notably Renner (2014).
7.
This observation tallies with the global trend see Renner (2014), p. 263.
8.
See also Zhang et al. (2016) showing P2P-lending to consumers growing slower than P2P-lending to businesses, although on a higher level between 2013 and 2015. Projections indicate that the trend will continue in the future, see Statista (2018a) reporting annual growth rates of 45.7% in the P2P business lending market until 2022 ultimately reaching EUR 2658 million.
9.
See also Dorfleitner et al. (2016) reporting default rates of 12–14% for Germany’s leading lending platforms.
10.
On the procedures of German crowdlending platforms see also Renner (2014), p. 263.
11.
For similar observations, see Dorfleitner and Hornuf at 26–31; more recent data for 2016 corroborates the general trend, see Statista (2018b). For additional empirical evidence, see also Herr and Bantaleon (2015); and for granular data on the early phase, see Klöhn and Hornuf (2012), pp. 239–246.
12.
See also Danwerth (2016) observing above average growth of crowdinvesting only in real estate, ecological project and movie financing.
13.
For anecdotal evidence on very high rejection rates of up to 99%, see also Hornuf and Schwienbacher (2015).
14.
See already Klöhn and Hornuf (2012), p. 239. This understanding tallies with definitions present in the international literature, see for instance Hazen (2012) who defines crowdfunding as sub-category of crowdsourcing “which refers to mass collaboration efforts through large numbers of people, generally using social media or the Internet”; similarly Heminway and Hoffman (2011), p. 881.
15.
As stated on its website, available at: https://www.bafin.de/EN/Aufsicht/FinTech/Crowdfunding/crowdfunding_node_en.html.
16.
See for instance Meschkowski and Wilhelmi (2013), p. 1411, referring to the Wikipedia definition, which also highlights the collective effort in raising resources over the internet to support projects; see also Jansen and Pfeifle (2012) who point to the origins of crowdfunding in sponsoring charitable or altruistic projects through web-campaigns.
17.
For a distinction between altruistic and financially motivated crowdfunding see for instance Sixt (2014). For a prudential supervisor’s distinction of loan based crowdfunding on the one hand and investment based crowdfunding on the other, see the Financial Conduct Authority (2014).
18.
The prototypical instance can be seen in Barack Obama’s fund raising campaign for his initial election, see Bradley (2008).
19.
Jansen and Pfeifle (2012), p. 1843; and Bareiß (2012), p. 460. For a delineation of possible designs, see also Schramm and Carstens (2014).
20.
For a delineation of the respective categories see Bodensiek and Leinemann (2015); see also Sixt (2014), pp. 57–58 and Schramm and Carstens (2014), p. 7.
21.
On this fundamental feature of loan contracts see Tröger (2012), pp. 1108–1109.
22.
Specifically on the definition of crowdinvesting as a form of financing of companies by granting an interest in the firm’s future cash-flows, Tröger (2017); similarly, see Klöhn et al. (2016b), p. 56 and Klöhn and Hornuf (2012), p. 239.
23.
Bürgerliches Gesetzbuch [BGB] [Civil Code], Aug. 18, 1896, RGBl. at 195, § 311 para. 1, translation at https://www.gesetze-im-internet.de/englisch_bgb/ empowers any person to create an obligation by contract.
24.
The German stock corporation law does not allow any material alteration of the statutory rights and duties of shareholders, Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. I at 1089, § 23 para. 5. Even for other legal forms of business organizations, German law adheres to the principle of numerus clausus limiting the latitude to customize membership interests, see for instance Schmidt (2002).
25.
As stated in Reichsgericht [RG] [Imperial Court of Justice] Jan. 30, 1940, 125 Entscheidungen des Reichsgerichts in Zivilsachen [RGZ] 380 (383); Bundesgerichtshof [BGH] [Federal Court of Justice] Sept. 23, 1981, 82 Entscheidungen des Bundesgerichtshofs in Zivilsachen [BGHZ] 274 (280–282); see also Koch (2016) and Chiusi (2013).
26.
The case being referred to as BGH Oct. 2, 1991 and which can be found in Neue Juristische Wochenschrift (NJW) (45) (1992) at 238–239; see also Koch (2016), and Chiusi (2013).
27.
For a similar assessment, see Bareiß (2012), p. 461.
28.
Under German private law, sponsoring contracts are construed as a combination of service and work and labor contracts, see Schaub (2008).
29.
For this majority view, see for instance BGH Nov. 27, 1991, 116 BGHZ 167 (170); see also Koch (2016). For an overview of the development of the doctrine, see Fischer (2002); for a critique, see Harke (2018).
30.
If transactions are qualified as “mixed donations”, see for instance Jansen and Pfeifle (2012), p. 1843, these classifications are misguided. Only if the discrepancy in value was indeed reverse, i.e. the consideration was worth more than the consideration, the transaction would be treated as a mixed donation, that is a single contract that combines elements of a donation and a sale (negotium mixtum con donatione), BGH Sep. 23, 1981, 82 BGHZ 274 (281–282); see also Koch (2016) and Chiusi (2013). However, as a matter of pure economic rationality, it is almost inconceivable that the value of the consideration is higher than the crowdfunding contribution, because then the campaign would lose money and miss its primary purpose.
31.
For a critique, see Ernst (2010).
32.
On the precise legal qualification of the latter, see further infra.
33.
If the campaign pertains to the production of a tangible good, the contract is one for work and materials (“Werklieferungsvertrag”), to which sales law also applies, cf. BGB, § 650 s. 1.
34.
For the general qualification of the acquisition of purchase rights for a consideration as a sale of rights see, Westermann (2016).
35.
Id.
36.
See also Berger and Skiera (2012), showing that a leading platform foresees that acquired cars are used as collateral in auto loans.
37.
Sometimes, in order to minimize the need for costly information sharing, the credit-extending bank sells and assigns the redemption claim to a servicing firm, which is linked to the platform and subsequently passes the claim on to the ultimate investor (Renner 2014, p. 264).
38.
In the U.S., the same result is reached with synthetic notes that replicate the cash flows from the loans platforms themselves extend and that are acquired by investors who may also trade on a secondary market, see Marte (2010).
39.
For anecdotal evidence in addition to the empirical findings reported infra, see Jansen and Pfeifle (2012), p. 1844, and Bareiß at 461.
40.
The following section reiterates the main findings in Klöhn et al. (2016a), pp. 148–178.
41.
Id. at 149 and at 152–154, showing that contracts usually are loan agreements that can be terminated after 5–7 years after a minimum notice period has elapsed and automatic termination after a fixed contract term representing an exception.
42.
Id. at 155–156, finding annual interest rates varying from 1% to 8% and due either upon redemption, or periodically (annually, quarter-annually).
43.
Id. at 158–160, identifying an unlimited pro-rata profit participation in four fifth of the cases and a capped participation in others.
44.
Id. at 161–165, describing that investors either receive a payment based on an appraisal of the issuer at the time the investment is terminated or a fraction of the proceeds that accrue to equityholders if they sell their shares.
45.
Id. at 160, also showing that liability was sometimes not limited in the past.
46.
Id. at 177–178. The reason for the subordination comes from prudential banking regulation which would submit borrowers to an authorization requirement, if the loans were not subject to a specific subordination clause, see Pölzig (2014).
47.
Id. at 166–168, indicating that contracts provide for a proportional adjustment of the participation ratio under which losses can only occur if the issuer is undervalued in the new round of financing.
48.
Id. at 168.
49.
Id. At 168–173, describing that disclosure obligations provide inter alia for quarterly reporting, disclosure of annual accounts, overview of profit- and revenue participation.
50.
Id. at 173–176; see also Jansen and Pfeifle (2012), p. 1844.
51.
For instance, see Jansen and Pfeifle (2012), p. 1846; also Bareiß (2012), p. 461; Klöhn et al. (2016a), p. 145. On the development of the market, which clearly shifted towards subordinated profit participating loans in reaction to prudential regulation, see Klöhn et al. (2016b), pp. 58–59.
52.
See generally Handelsgesetzbuch [HGB] [Commercial Code], May 10, 1897, RGBl. 219, §§ 230-6 HGB, translation at https://www.gesetze-im-internet.de/englisch_hgb/englisch_hgb.pdf.
53.
The latter have not received a special treatment neither in the German Civil nor the Commercial Code, but are anticipated in different legislative acts, like for instance Capital Investment Act [Vermögensanlagengesetz, VermAnlG], Dec. 6, 2011, BGBl. I at 2481, § 1 para. 2 Nr. 4, https://www.gesetze-im-internet.de/vermanlg/ or AktG, § 221 paras. 3 and 4. The lack of statutory prescriptions together with the fundamental principle of freedom of contract allow for a highly flexible individual design of parties’ obligations in these profit participation rights.
54.
The contract combines a regular loan with an additional stipulation of sharing in the profits or sales that flow from the investment of the borrowed funds as compensation for the lender, see for instance Schmidt (2012); Schäfer (2017); and Huffer (1970).
55.
As this result notably from: RG May 11, 1920, 99 RGZ 161 (163), BGH Jun. 6, 1965, 19 WM 1965, 1052 (1053); see Freitag (2015), and Blaurock (2010).
56.
See HGB § 233 para. 1, which describes typical control rights of a silent partner.
57.
See generally Habersack (2016), and Merkt (2016).
58.
Jansen and Pfeifle (2012), p. 1846; Bareiß (2012), p. 461.
59.
See generally Schmidt (2012); Schäfer (2017); in the context of crowdinvesting Jansen and Pfeifle (2012), p. 1846; Bareiß (2012), p. 461.
60.
See Jansen and Pfeifle (2012), p. 1846, submitting that these transactions should be seen as profit participation contracts sui generis.
61.
Cf. BGB § 488 para. 1 sentence 2 declaring a repayment obligation essential part of a loan contract under German law, see also Freitag (2015). Where investors receive a fraction of each individual sale (for instance a share of each cinema ticket sold), this contract design can be qualified as a special annuity arrangement (until the contribution is repaid) and a profit participation (after repayment).
62.
Given the legal character of the participation rights as debt contracts, such a classification is not excluded simply because investors do not receive an ownership stake in the funded entity (for this view, see Jansen and Pfeifle (2012), pp. 1844–1845).
63.
For the doctrinal details see for instance Fezer (2016).
64.
For a general discussion of the relevant doctrine, see Beck (2015).
65.
Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I), 2008 O.J. (L 177) 6 [hereinafter Rome I Regulation].
66.
According to the German majority view this requires securitization of the claim to facilitate its transfer by an assignment of the instrument, see for instance Martiny (2012), and Kieninger (2018).
67.
Rome I Regulation, art. 1 para. 2 lit. f).
68.
Rome I Regulation, art. 3 para. 1. On the preconditions for valid clauses in standard terms, see Verein für Konsumenteninformation v. Amazon, Case C-191/15, [2016] E.C.R. I ___ (delivered on 28 Jul. 2016).
69.
The anecdotal evidence reported in Spindler (2017), p. 139 is inconclusive as the terms and conditions the author cites are those for the relationship between investors and platforms only.
70.
Rome I Regulation, art. 6 para. 2 s. 2.
71.
According to recital 30 of the Rome I Regulation, its art. 6 para. 4 lit. d) pertains only to financial instruments within the meaning of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU, art. 4 para. 17 and Annex I C, [2014] O.J. (L 173) at 349 which does neither capture silent partnership interests, nor profit participation rights, nor subordinated profit participating loans, for a discussion see Spindler (2017), p. 139.
72.
See also Spindler (2017), p. 141, showing that the relevant rules cannot be qualified as overriding mandatory provisions within the meaning of Rome I Regulation, art. 9 para. 1.
73.
Rome I Regulation, art. 6 para. 1 points to the law of the country of the consumer’s habitual residence.
74.
Rome I Regulation, art. 3 para. 1.
75.
For a specific discussion, albeit focused on crowdinvesting relationships, see Spindler (2017), p. 140.
76.
Otherwise this intermediate step in the discharge of the platform’s role can be seen as “deposit business” which requires a banking license.
77.
See Banking Act [Kreditwesengesetz, KWG], Sep. 9, 1998, BGBl. I at 2446, § 32, with the relevant definitions codified in KWG, § 1 para. 1a sentence 2 and Securities Trading Act [Wertpapierhandelsgesetz, WpHG], Sep. 9, 1998, BGBl. I at 2708, § 2 para. 3, https://www.gesetze-im-internet.de/wphg/.
78.
As defined in KWG § 1 para. 1a sentence 2 no. 1; for an extensive discussion of the latter aspect, see Veith (2016).
79.
Defined in KWG, § 1 para. 2 No. 1.
80.
For a general discussion of the respective element in KWG, § 1 para. 2 No. 1, see Demgensky and Erm (2001).
81.
As defined in KWG, § 1 para. 2 no. 2.
82.
For the U.S. model which sees platforms extend loans, see supra.
83.
KWG, § 37 para. 1 s. 4 empowers BaFin to stop the operations of and wind-down firms that were involved in the initiation, conclusion or execution of prohibited (unauthorized) activities.
84.
Cf. KWG, § 32 para. 1 s. 1. As a matter of practice, the second alternative of the provision, that the activity requires a commercial business organization (“in kaufmännischer Weise eingerichteter Geschäftsbetrieb”) is mute, because the elements of a commercial activity are usually met, even though no specific organizational arrangements are necessary.
85.
As shown in the case BGH of 11 Jul. 2006, 60 Der Betrieb (DB) 2061, 2062 (2006). See also BaFin (2016), Schäfer (2016).
86.
See also Renner (2014), p. 266, with a critique that favors a more restrictive interpretation. See further Schwennicke (2010) arguing in favor of firm de minimis limits.
87.
For an alternative proposal that would retain a direct contracting model but use subordinated loans, see Veith (2016), p. 187.
88.
For an extensive discussion, see Veith (2016), pp. 188–189.
89.
For an overview on the question if issuers need an authorization because they engage in “deposit business” (“Einlagengeschäft”) within the meaning of KWG, § 1 para. 2 No. 1, see for instance Nietsch and Eberle (2014a).
90.
WpHG § 2 para. 2b; KWG § 1 para. 11.
91.
Capital Investment Act [Vermögensanlagengesetz, VermAnlG], Dec. 6, 2011, BGBl. I at 2481, § 1 para. 2, https://www.gesetze-im-internet.de/vermanlg/.
92.
Prior to the 2015 reforms a debate existed about whether the definition of financial assets also included profit participating loans (see for instance Weitnauer and Parzinger (2013), p. 155, advocating an inclusive definition on normative grounds; see however Nietsch and Eberle (2014a), pp. 1790 and 1793, opposing such a wide definition).
93.
As defined in KWG, § 1 para. 1 sentence 2 no. 10; WpHG, § 2 para. 3 sentence 1 no. 5.
94.
On the general precondition of a firm underwriting to fall under the statutory regime, see Schäfer (2016); see also Kumpan (2010).
95.
As defined in KWG § 1 para. 1a sentence 2 no. 1c; WpHG, § 2 para. 3 sentence 1 no. 6.
96.
See BaFin (2009), requiring a disclosed open agency relationship.
97.
For a detailed description of the relevant provisions’ content see Jansen and Pfeifle (2012), pp. 1850–1851; and Klöhn and Hornuf (2012), pp. 250–251.
98.
As defined in KWG § 1 para. 1a sentence 2 no. 1; WpHG, § 2 para. 3 sentence 1 no. 4.
99.
See for instance Nietsch and Eberle (2014b), p. 2576.
100.
As defined in KWG, § 1 para. 6 no. 8 Buchst. e); WpHG, § 2a para. 1 no. 7 Buchst. e).
101.
Trade Regulation [Gewerbeordnung, GewO], Feb. 22, 1999, BGBl. I at 202, § 34 para. 1 sentence 1, https://www.gesetze-im-internet.de/gewo/index.html#BJNR002450869BJNE025705118.
102.
As defined in KWG, § 1 para. 1a no. 1b; WpHG, § 2 para. 3 no. 8. See also Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC, 4 para. 1 no. 15, 2004 O.J. (L 145) 1 [hereinafter MiFiD].
103.
See MiFiD, recital 5.
104.
See also the explanations given by the BaFin in resepct of crowdinvesting on its website at: https://www.bafin.de/EN/Aufsicht/FinTech/Crowdfunding/Crowdinvesting/crowdinvesting_node_en.html.
105.
For a general overview see Assmann (2012) at para. 110.
106.
Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012, [2013] O.J. (L 176) 1.
107.
WpHG, §§ 63–98.
108.
Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions, art. 4 para. 1 lit. a), [2013] O.J. (L 287) 63.
109.
For an analysis and critique, see Tröger (2017), p. 83.
110.
Gesetz über das Aufspüren von Gewinnen aus schweren Straftaten - Geldwäschegesetz [GwG] [Moneylaundering Act] June 23, 2017, BGBl. I at 1822, https://www.gesetze-im-internet.de/gwg_2017/GwG.pdf.
111.
Gesetz über die Beaufsichtigung von Zahlungsdiensten (Zahlungsdiensteaufsichtsgesetz) [ZAG] [Payment Services Supervision Act] July 17, 2017, BGBl. I at 2446, http://www.gesetze-im-internet.de/zag_2018/ZAG.pdf.
112.
Kapitalanlagegesetzbuch [KAGB] [Capital Investment Code] July 4, 2013, BGBl. I at 1981, https://www.gesetze-im-internet.de/kagb/KAGB.pdf.
113.
BGB, § 491a. For detailed description of the information duties Jan Schürnbrandt, Vor § 491 para. 4, in Münchener Kommentar zum BGB, Vol. 3 (Franz Jürgen Säcker et al. eds., 7th ed. 2016); for a discussion in the context of crowdlending see Veith supra note 78 at 193; Renner supra note 6 at 268–269.
114.
Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC, art. 5-7, [2008] O.J. (L 133) 66, implemented in BGB, §§ 491a, 493.
115.
Einführungsgesetz zum Bürgerlichen Gesetzbuche (EGBGB) [Introductory Act to Civil Code], Aug. 18, 1896, RBl. 604, Art. 247 § 13.
116.
See notably Gilson (2003), describing the key problems in venture capital investing. See also Cumming and Johan (2009), showing that the features of equity claims make for lemon markets in both equity and debt financing of start-up firms because unprofitable ventures are more likely to issue equity while riskier ones have a proclivity to seek debt financing.
117.
More specifically for Germany, see Meschkowski and Wilhelmi (2013), pp. 1410–1411.
118.
An investment advisor has to provide recommendations inter alia with a view to the specific financial situation of individual investors and the characteristics of the investment, see for instance BGH, July 6, 1993, BGHZ 123, 126 (128–129); see also Emmerich (2016).
119.
However, if platforms use client data to provide recommendations derived from algorithms, for instance based on past investment behavior, they might be seen as investment advisors and incur far reaching fiduciary obligations, see Jansen and Pfeifle (2012), p. 1849.
120.
Generally on the highly relevant distinction of investment advice on the one hand and investment brokerage on the other in German law, see Assman (2002), p. 648; see also Mölllers and Ganten (1998), pp. 785–786.
121.
For these well-established, general preconditions for a tacit agreement to provide information see for instance BGH, Mar. 22, 1979, 74 BGHZ 103 (106); BGH, Mar. 4, 1987, 100 BGHZ 117 (118-9); BGH, May 13, 1993, 14 ZIP 997 (1993) BGH, Oct. 19, 2006, 27 ZIP 2221 (2006); see also Heermann (2017) and Siol (2017).
122.
For an analysis and critique of cases, see Benedict (2005), pp. 2131–2133.
123.
See generally 74 BGHZ 103 (110); BGH, Feb. 16, 1981, 80 BGHZ 80 (81–82); see also Emmerich (2016) at para 127; and Siol (2017) at para 9.
124.
VermAnlG, § 18 para. 1 no. 2 and no. 3 empower the supervisor (BaFin) to prohibit public offerings of investments from going forward if they violate the prospectus requirements.
125.
Small Investor Protection Act [Kleinanlegerschutzgesetz, KASG], July 3, 2015, BGBl. I at 1114, art. 2 no. 4.
126.
VermAnlG, § 2a.
127.
For a more granular description of the relevant statutory requirements, Klöhn et al. (2016b), pp. 59–60; for in-depths analyses see Danwerth (2016), pp. 25–36; Casper (2015), pp. 275–280; and Nietsch and Eberle (2014a), p. 1789.
128.
For a policy discussion of investment limits, see Klöhn and Hornuf (2012), pp. 262–264. For a critique of the current limits see Klöhn and Hornuf (2015), pp. 52–53.
129.
VermAnlG, §§ 13, 15. For details, see Klöhn et al. (2016b), p. 60.
130.
On the concept, see Romano (1998), pp. 2362 and 2418, proposing that issuers be permitted to opt into both US States’ and foreign nations disclosure regimes; see also Palmiter (1999), pp. 86–91, restricting issuer choice to the selection of a primary market disclosure regime; and for a critique, see Fox (1999), pp. 1345–1356, holding that the divergence between managers’ private benefits and social benefits derived from disclosure rules will induce suboptimal outcomes under a regime of issuer choice.
131.
VermAnlG, § 13 para. 3a.
132.
VermAnlG, § 16 para. 1; see Klöhn et al. (2016b), p. 60.
133.
VermAnlG, § 12 para. 2 and 3 prescribe that the express warnings that a total loss of funds invested is possible and that a promised return is not guaranteed are sufficiently visible also in advertisement campaigns. For a granular delineation of the restrictions, see Waschbusch (2016).
134.
See also Bareiß (2012), p. 459, reporting that payment accounts of contributors are only debited if target levels for overall financing are reached or contributions are returned if these levels are undercut.
135.
At least the general duty to avoid any acts that threaten the purpose parties pursue with the contract (on the respective construction of the accompanying duties mentioned in BGB, § 241 para. 2 see Bachmann (2016) applies, regardless of the legal qualification of the crowdfunding relationship. See also Jansen and Pfeifle (2012), p. 1845.
136.
For crowdinvesting, see Jansen and Pfeifle (2012), p. 1851, also showing that platforms are not commercial agents.
137.
BGB, § 652.
138.
As outlined supra note 135 under German law, every obligation carries the accompanying duty to avoid any act that could thwart the contractual goals of the other party.
139.
BGB, § 307 para. 2 s. 1. On impact this provision that reinforces the equitable content of default rules see Wurmnest (2016).
140.
BGB, §§ 305–310.
141.
BGB, §§ 491–505e.
142.
BGB, §§ 305 para. 2.
143.
BGB, § 495.
144.
For a detailed description, see Klöhn et al. (2016b), p. 60; also Casper (2015), p. 279.
145.
VermAnlG, § 15 paras. 3 and 4.
146.
For the general rule, see BGH, Apr. 3, 1996, 49 NJW 1206, 1207 (1996).
147.
BGB, §§ 505a-505e.
148.
BGB, § 138. For an overview of the complex jurisprudence that presumes a relevant mismatch if the interest rate charged is two times as high as the relevant basis rate, see BGH, Jan. 15, 1987, BGHZ 99, 333 (336); see also Armbrüster (2016).
149.
BGB, §§ 241 para. 2, 242.
150.
BGB, § 518 para. 1 s. 1.
151.
BGB, § 518 para. 2.
152.
The notarization requirement seeks to prevent hasty decision making that does not properly reflect the transfer of value, which seems unnecessary if the instantaneous transfer of property makes the sacrifice immediately felt, see for instance Koch (2016) and Chiusi (2013).
153.
BGB, §§ 280 para. 1, 276 para. 1.
154.
The cases do not specifically pertain to crowdinvesting, but to investment brokers in general and are therefore relevant for the determination of platforms’ duties to inform. For an overview, see Siol (2017) at para. 18–21.
155.
To find negligence, BGB, § 276 para. 2, requires a showing that the debtor violated the duty of care as observed by the respective public circles. Hence, the objective standard needs to be specified with a view to the respective contractual obligation, see for instance BGH, Mar. 17, 1981, BGHZ 80, 186 (193); see also Grundmann (2016a).
156.
An explicit safe harbor protecting business judgement against judicial second guessing prone to hindsight bias is codified in AktG, § 93 para. 1 s. 2 for managers of stock corporations. Beyond the narrow scope of this specific provision, the underlying principle is also relevant in general private law.
157.
Cf. BGB, § 244 presumes that parties to a contract can agree on the use of any currency, for details see Grundmann (2016b).
158.
For the text, see Bundesverband Crowdfunding, Verhaltenskodex für Crowdfunding-Plattformen im Bundesverband Crowdfunding e.V. (2018), http://www.bundesverband-crowdfunding.de/verhaltenskodex-fuer-crowdfunding-plattformen-im-bundesverband-crowdfunding-e-v/.
159.
For an overview of the tax treatment of crowdinvestment, with a specific view on the treatment of returns, see Rogge (2017).
160.
For details see Einkommensteuergesetz (EStG) [Income Tax Code], §§ 20 para. 1 No. 1, No. 4 and No. 7, para. 2 s. 1 No. 1, 32d para. 1, Oct. 8, 2009, BGBl. I at 3366, 3862. If the individual tax rate is lower, contributors can seek reimbursement of the difference in their income tax declaration.
161.
Solidaritätszuschlagsgesetz 1995 (SolzG 1995) [Solidarity Tax Act 1995], §§ 1 para. 1, 4 s. 1, Oct. 15, 2002, BGBl. I 4130.
162.
For details, see Rogge (2017), pp. 33–34. The significant tax exemption granted in Körperschaftssteuergesetz (KStG) [Corporate Tax Code], § 8b, Oct. 15, 2002, BGBl. I at 4144, does not apply to the typical forms of crowd-funding investments, because the hybrid capital instruments granted in campaigns do not qualify as an equity stake for tax purposes.
163.
The author is also explaining the complicated regime of local business tax.
164.
EStG, § 10b para. 1; KStG, § 10b para. 1 No. 2.

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Tröger, T.H. (2021). Regulation of Crowdfunding in Germany. In: Kleiner, C. (eds) Legal Aspects of Crowdfunding. Ius Comparatum - Global Studies in Comparative Law, vol 55. Springer, Cham. https://doi.org/10.1007/978-3-030-79264-0_3

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