Cyprus introduces new fines for crowdfunding service providers

The Cypriot government has submitted a bill to parliament to implement EU Regulation 2020/1503, which governs crowdfunding service providers. This move aims to complete a mandatory harmonisation process that was originally due by November 10, 2021. Under the new legislation, the Cyprus Securities and Exchange Commission is empowered to impose fines of up to €500,000 or up to 5% of a company’s annual turnover for legal breaches. The 5% fine would be calculated based on the most recent board-approved financial statements. The bill grants the regulator discretion to determine which fine is applied based on the size of the entity and the severity of the violation. The legislation replaces existing laws to comply with EU demands for effective, proportionate, and dissuasive sanctions. An accompanying note warns that failing to pass this bill could lead to legal action by the European Commission before the Court of Justice of the European Union, resulting in additional financial penalties. The framework is intended to regulate platforms providing alternative funding for businesses, particularly startups and small-to-medium enterprises.