Article 11
Information about risk mitigation measures
1. For the purposes of Article 6(4), point (e), of Regulation (EU) 2020/1503, a ‘risk mitigation measure’ shall mean a technique used by a project owner to reduce the credit risk associated with a loan, which can take either of the following forms:
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(a) |
‘funded credit protection’, which means a technique of risk mitigation where the reduction of the credit risk associated with a loan derives from the right of the investor, in the event of the default of the loan or on the occurrence of other specified credit events relating to the project or project owner, to liquidate or obtain transfer or appropriation of, or to retain, certain assets or amounts, or to reduce the amount of the loan; |
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(b) |
‘unfunded credit protection’, which means a technique of risk mitigation where the reduction of the credit risk associated with a loan derives from the obligation of a third party to pay an amount in the event of the default of the loan or on the occurrence of other specified credit events relating to the project or project owner. |
2. In the event that a loan is guaranteed by ‘funded credit protection’ as referred to in paragraph 1, the crowdfunding service provider shall provide all of the following information:
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(a) |
the type of asset(s); |
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(b) |
the most recent valuation of such asset(s) and the amount(s) that can be liquidated, transferred, retained or appropriated; |
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(c) |
the valuation method; |
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(d) |
the ratio between the amount referred to in for in point (b) and the total notional amount of the loan, expressed as a percentage. |
3. In the event that a loan is guaranteed by ‘unfunded credit protection’ as referred to in paragraph 2, the crowdfunding service provider shall provide, as a minimum, the following information:
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(a) |
the name, address and legal nature of the third party acting as protection provider or guarantor; |
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(b) |
the ratio between:
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4. For the purposes of paragraphs 2 and 3, crowdfunding service providers shall ensure all of the following:
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(a) |
that the eligibility and the valuation of any risk mitigation measure are assessed in accordance with adequate policies and procedures within the risk management framework, as referred to in Article 4(4), point (f) of Regulation (EU) 2020/1503 and as specified in accordance with Article 19(7), point (d) of that Regulation; |
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(b) |
that the valuation of any risk mitigation measure takes into account all the disposition costs arising from obtaining and selling collateral. |