Here’s another edition of our blog series “Behind the scenes of MyMicroInvest”, which is an interview with our staff to showcase the people working to support our platform. Our first entry featured our Senior Investment Analyst.
Today, we bring you an interview with one of our legal minds, Sarah Kawa, who has been with us since our early stages. Sarah helps us to ensure our platform meets all legal standards and requirements. Sarah has truly become an expert in crowdfunding law in Belgium, all while keeping us entertained with her dry humour.
Let’s start by telling us who you are and what you do
So, my name is Sarah, and I’ve worked with MyMicroInvest since March 2015. Today I am head of legal and compliance. Prior to joining MyMicroInvest, I worked in a few different law firms as an associate and intern. I studied law at Unversité Saint-Louis in Brussels, and have a Master’s in law from Université libre de Bruxelles. Day to day I work with my fellow lawyer, Jonathan Piepers, and the MyMicroInvest management to ensure compliance of our activities and protection of our crowd.
Now, give us some insight into the legal structure of MyMicroInvest
There is no general rule on how a crowdfunding platform is structured. You will find as many different structures as there are crowdfunding platforms. MyMicroInvest is the mother company where all our business activities are located. MyMicroInvest holds 100% of MyMicroInvest Finance (MMIF). MMIF is an issuer company: it has no activity other than holding the participation in the companies of our crowdfunding campaigns, and issuing correlated financial instruments.
For every crowdfunding campaign, people from the crowd invest in one single dedicated compartment of MyMicroInvest Finance. From the moment the crowdfunding campaign is successful and a co-investor has been found, the compartment of MMIF will invest the amount raised into the underlying company so that the company has one single shareholder – MMIF, instead of the crowd. That makes it easier for everyone - investors and entrepreneurs.
So the crowd investors are not shareholders?
No. This is a legal distinction. Instead of receiving a “share”, every investor receives what we call a “Participatory Note”. This Note gives the crowd-investor the right to receive all the financial returns gained by MyMicroInvest Finance, except a possible performance fee if the financial returns for investors is higher than 5% per year, while MMIF keeps all of the non-financial rights.
Even if MMIF is the shareholder of the company and therefore officially has the voting power, we always include the crowd in decision making. For important decisions that financially impact the crowd, we hold general assemblies to receive feedback and make decisions.
Is MMIF secure for investors?
Yes! MMIF is organised as a bankruptcy remote vehicle.
- For every crowdfunding campaign, MMIF creates a separate compartment. The new law on crowdfunding (see below) recognizes that every compartment is segregated, so that the risk of one compartment will not contaminate any other compartment from any other operation. Each business is remote from the other - even in case of bankruptcy.
- There is no business activity in MMIF and in case if there are debts, from the state for example, debts are guaranteed by MyMicroInvest
- In addition, MMIF is required to make payments to the crowd and to MyMicroInvest (for management fees) only to the extent of the cash it actually receives from its investments in financed companies. As a result, MMIF will never be in a situation where it has an insufficient cash flow to make required payments.
Is MyMicroInvest regulated and controlled by any authority?
On 18 December 2016, a new law was adopted by the Belgian Parliament that articulates the accreditation rules for crowdfunding platforms.
The law (in effect since February 2017) focuses on investor protection and imposes rules for crowdfunding platforms, like mandatory liability insurance, testing investor knowledge and experience and the implementation of a sound governance and organisation.
And as of April 2017, MyMicroInvest is the first crowdfunding platform to get accreditation from the FSMA and is now able to offer Tax Shelter legally to all its members.