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Whistleblower-System

The Alternative Financing Act

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To supplement the existing supervisory rules such as the Capital Market Act (KMG; Kapitalmarktgesetz), a specific legal framework has been put in place for the purposes of providing small and medium-sized Enterprises with finance via particular financing models. The Alternative Financing Act (AltFG; Alternativfinanzierungsgesetz) will make it easier for such companies to access the capital market. Additionally, the Act also stipulates minimum standards for the operators of crowdfunding platforms.
Compliance with the provisions of the AltFG or of any regulation enacted on the basis of the AltFG is not supervised by the FMA. Punitive action in the event of any administrative offence is taken by the responsible district administration authority. Consequently, any interpretation issues regarding the provisions of the AltFG do not fall within the remit of the FMA.

An information obligation rather than a prospectus obligation

Neither a prospectus obligation nor an information obligation applies to a public offering of alternative financial instruments with a total value of up to EUR 100 000 (or up to EUR 750 000 in the case of shares in a cooperative). If the alternative financial instruments take the form of equities or bonds, a prospectus as defined in Article 2 KMG must be published for any public offering in excess of EUR 250 000. Public offerings of other alternative financial instruments up to a total amount of EUR 1.5 million are only subject to certain information obligations. These include the obligation to publish the latest financial statements without delay and to provide an annual information update.

For public offerings with a total value of EUR 1.5 million upwards (or EUR 250 000 upwards in the case of equities and bonds), a prospectus as defined in Article 2 KMG must be published. Up to a limit of EUR 5 million, the obligation to publish a prospectus may be met by preparing a simplified prospectus as defined in Annex F of the KMG. The provisions of Article 3 para. 2 AltFG apply to the calculation of this limit.

If the total value exceeds EUR 5 million or if the limit defined in Article 3 para. 2 AltFG is exceeded, the general obligation to publish a prospectus applies accordingly.

A detailed overview of the thresholds can be found by clicking on Downloads in the footer.

Individual investment limit

The maximum amount that may be invested by any investor over a twelve-month period must generally not exceed EUR 5 000. This limit does not apply in the case of professional investors as defined in the Alternative Investment Fund Managers Act (AIFMG; Alternatives Investmentfonds Manager-Gesetz) or may be waived in the case of legal persons (if not consumers) or if the investor provides the corresponding information on income and/or financial assets.

Information obligations and right to withdraw

This obligation to provide investors with information is met by providing an information sheet that complies with the terms of the AltFG and the Alternative Financing Information Regulation (AltF-InfoV; Alternativfinanzierungs-Informationsverordnung). The information should be checked for coherence, completeness and comprehensibility by, for example, an auditor, a lawyer, a notary, a management consultant, an asset manager or the responsible audit association in the case of a cooperative.

This check should also involve ensuring that the contractual conditions and information sheet are consistent with each other. If information is not made available to a consumer in accordance with the Consumer Protection Act (KSchG; Konsumentenschutzgesetz), the consumer is entitled to withdraw from the offer or contract concerned. The right to withdraw expires two weeks after the date on which the investor receives the originally missing information and is informed about the right to withdraw.

Internet platforms

Operators of an internet platform may act as brokers of alternative financial instruments, intervening between investors and issuers, provided that they are authorised pursuant to Article 94 no. 75 of the 1994 Trade Act (GewO 1994; Gewerbeordnung) if acting as an investment broker or hold a licence pursuant to Article 4 para. 1 of the 2007 Securities Supervision Act (WAG 2007; Wertpapieraufsichtsgesetz) if acting as a broker for alternative financial instruments of the type covered by Article 1 no. 6 WAG 2007. Operators of an internet platform may not hold a licence pursuant to the Austrian Banking Act (BWG; Bankwesengesetz), the Alternative Investment Fund Managers Act (AIFMG; Alternatives Investmentfonds Manager-Gesetz), the Payment Services Act (ZaDiG; Zahlungsdienstegesetz), the 2016 Insurance Supervision Act (VAG 2016; Versicherungsaufsichtsgesetz) and the 2010 Electronic Money Act (E-GeldG 2010; E-Geldgesetz) at the same time.

There is no legal basis here for banks, alternative investment funds pursuant to the AIFMG, payment institutions and electronic money institutions. Whether and on what scale they are permitted to operate internet platforms depends on the respective supervisory laws.

Platform operators as defined in the AltFG also face numerous obligations:

  • obligations in relation to prevention of money laundering, particularly identification of Investors;
  • minimum information obligations, particularly regarding the platform itself and its operator, the selection criteria applied to projects and the fees charged. They are subject to the terms of the 2000 Data Protection Act (DSG 2000; Datenschutzgesetz);
  • publication of their annual financial Statements;
  • ban on any activity on the operator’s own platform in the capacity of issuer; the platform itself may only act in the capacity of investor under certain conditions;
  • obligation to provide information on recommended risk diversification and obligation to warn about the risk of a total loss of the Investment.

The AltFG does not contain any specific rules applicable to the processing of payments via an Internet platform, with the terms of the ZaDiG continuing to apply as before.

Administrative sanctions and enforcement

Responsibility for enforcing the AltFG lies with the district administration authority (district commission or municipal authority) and not with the FMA. Consequently, the FMA only supervises AltFG issuers or platforms in instances where these are subject to supervision as provided for under other federal laws (particularly in cases where securities are being placed for investment via the platform pursuant to the WAG 2007). The district administration authorities may, in particular, impose administrative penalties of up to EUR 30 000.

The FMA will take action to sanction any breaches (Article 16 no. 5 KMG) of the obligation to report new issues for inclusion in the new-issue calendar (Article 13 KMG). Provided that the offering is not exempt from the reporting obligation pursuant to Article 13 para. 2 KMG, the issue must be reported for inclusion in the new-issue calendar before securities or investments are offered for the first time, even if the offering is subject to the AltFG.

 

Further information