The Colombian government enacted Decree 1357 (hereafter the Decree) last July, which regulates crowdfunding platforms in line with the international growth of the industry. This as an attempt to bridge the gap between the supply of funds and start-up businesses.
The Decree generally establishes that: (i) Colombian entities offering crowdfunding services must be a) incorporated as sole purpose stock corporations authorised by the Superintendence of Finance, b) stock exchanges, or c) trading systems; (ii) the fundraisers must act on their own behalf, for their own benefit; and (iii) the funds must be used for productive investment projects.
The Decree further limits the practice of Colombian crowdfunding platforms to undertake crowdfunding activities via the issuance of securities (known internationally as 'equity crowdfunding'). Other types of crowdfunding, such as peer-to-peer lending, rewards- and donation-based crowdfunding, do not fall under the scope of this regulation.
Securities-based crowdfunding in Colombia requires the investment in securities to be issued by the fundraisers. Following international practices, the Colombian government excludes the purchase of such securities from the public offerings rules and the fundraisers from the qualification of issuers registered with the National Registry of Securities and Issuers (RNVE), and from the issuers' obligations.
The Decree defines the financial limits to fundraisers and investors. Fundraisers wishing to finance their project or start-up are subject to an approximately $782,000 cap, or $2.6 million if the investors are qualified. Likewise, non-qualified investors can contribute up to 20 per cent of either their net worth or their annual income, whichever the highest.
The Decree does not apply to Colombian residents that participate crowdfunding initiatives undertaken by foreign companies. However, according to the current regulation, foreign crowdfunding companies must comply with the legal regime applicable to the promotion of foreign financial services.