(1)

Pursuant to Article 8(3) of Regulation (EU) 2020/1503, crowdfunding service providers are to maintain and operate effective internal rules to prevent conflicts of interest. In order to ensure that such rules meet their objective of preventing conflicts of interest over time, crowdfunding service providers should review those rules periodically and at least on an annual basis, and ensure that appropriate measures are taken to address any deficiencies regarding such rules.

(2)

To manage conflicts of interest, crowdfunding service providers should not over-rely on disclosure requirements set out in Article 8(5) of Regulation (EU) 2020/1503. Therefore, they should establish internal rules to prevent conflicts of interest. Internal rules to prevent conflicts of interest should be appropriate to the nature, scale and complexity of the crowdfunding services provided as well as to the size and organisation of the crowdfunding services provider’s business. In that regard, internal rules to prevent conflicts of interest should take into account, where relevant, circumstances related to the fact that the crowdfunding service provider belongs to a group.

(3)

In designing internal rules to prevent conflicts of interest, crowdfunding service providers should make their best efforts to ensure the prevention, identification and management of conflicts of interest. Where a conflict of interest is nevertheless identified, crowdfunding service providers should take the necessary steps to ensure the disclosure of that conflict of interest to the clients of the crowdfunding service provider and to any other party who may be impacted.

(4)

The steps that crowdfunding service providers are to take in accordance with Article 8(4) of Regulation (EU) 2020/1503 should ensure with reasonable confidence that risks of damage to clients’ interests will be prevented and, where this is not possible, appropriately mitigated.

(5)

To ensure that clients can take an informed decision about services presenting actual conflict of interests, crowdfunding service providers should keep up-to-date the information, disclosed in accordance with Article 8(5) of Regulation (EU) 2020/1503, about the general nature and sources of conflicts of interest as well as the steps taken to mitigate them. Such disclosure should be appropriate to the nature of the clients to whom or which it is addressed, in particular taking into account their qualification as sophisticated or non-sophisticated investors, including prospective investors. The disclosure should include a description of the conflicts of interests and the related risks for the clients.

(6)

This Regulation is based on the draft regulatory technical standards submitted to the Commission by the European Securities and Markets Authority.

(7)

European Securities and Markets Authority has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the advice of the Securities and Markets Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council (2).

(8)

The European Data Protection Supervisor was consulted in accordance with Article 42(1) of Regulation (EU) 2018/1725 of the European Parliament and of the Council (3) and delivered an opinion on 1 June 2022,