A crowdfunding company has as a main characteristic the fact that it raises the necessary capitalfor conducting a specific business purpose from a large number of investors. This can be achieved by collecting small amounts of money such persons (or other legal entities) have invested in the respective business. Businessmen interested in Irish company formationfor a crowfunding company should know that most of such businesses gather their capital through social media platforms and, as a general rule, through online communication methods. Our team of consultants incompany formation in Ireland can provide in-depth advice on the main aspects regarding this type of business.
Main sources of income through crowdfunding in Ireland
Crowdfunding is a typical means of collecting capital which is usually enforced by start-ups in Ireland or small and medium sized companies (SMEs). The method represents an apealling alternative to the traditional manner of obtaing capital for a company, which is usually handled through a banking institution.
The following video offers a short presentation on the crowdfunding sector in Ireland:
Investors who want to open an Irish company with the purpose of offering crowdfunding services must know that there are three main types of crowdfunding options, as follows:
•donation, usually applied for charitable purposes or small rewards (generally referring to the products or services provided by the company, once the business will start its operations);
•lending (in which the parties will invest in theIrish companyknowing that the respective sum of money will be repaid with interest);
•investment(the investor will benefit from a percentage of the company’s profits).
Since this option for raising capital is rather new, the Irish authorities have not yet established a suitable regulatory framework. However, in April 2017, the local government presented a consultation paper on this matter, setting up a public consultation regarding the need of creating a legislative framework for crowdfunding companies.
The consultation will establish if specific rules of law (such as the Central Bank Act 2013) should apply to the field of crowdfunding. At the same time, it will verify if the crowdfunding platforms are to be regulated under specific provisions.
Businessmen interested in starting the procedure of company formation in Ireland in this field are invited to contact our team of consultants for further information on this subject.
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