Published legislation and draft legislation - Colombia

Crowdfunding models

Bill 111-2017 // Draft Decree Ministry of Finance and Public Lending

Bill 111-2017, before the Republic of Colombia’s Congress of Representatives, seeks to introduce innovations in the National Development Plan’s key objectives.

One of the most important parts of the text has to do with the creation of Shared Work Centers, where micro entrepreneurs and small business people can share a space, equipped with offices and desks to pursue their projects independently. These Shared Work Centers will have to be regulated within a six (6) month period after the law comes into force and created in the following two (2) years.

Similarly, crowdfunding models will be included. Four group funding models are listed, although these have not yet been developed:

  • Donation-based community models
  • Reward-based community models,
  • Financial schemes based on loans, and
  • Share-based financial schemes.

The document sets a period of twelve (12) months from when the law is passed, for central government to present a bill to Congress authorizing the crowdfunding models specified in this bill and that defines, among other matters, the control and monitoring functions to the corresponding supervisory body.

The Ministry of Finance & Public Lending has recently published a draft decree regulating online crowdfunding of productive projects managed through institutions regulated by Colombia’s supervisory authority, the SFC, in which securities are issued.

The draft text contains specific rules for administrators of these platforms, contributors and recipients, on matters such as:

  • Information disclosure
  • Anti-money laundering and financing of terrorism mechanisms
  • Handling conflicts of interest
  • A series of limits in order to protect contributors and recipients

In addition, certain requirements have been set for online crowdfunding:  

  • Classification of productive projects through objective risk-analysis procedures
  • Adoption of operating regulations
  • Reporting and updates of information about contributors and recipients to be sent to information centers
  • Limits on the sum that can be invested per project, to be set at 10 MMW or 5% of annual income, whichever is the lower; a global limit of 30 MMW or 15% of annual income, whichever is the lower.

Finally, specific rules have been laid out for the securities that form part of the crowdfunding, relative to their issuance, sale and purchase, non-negotiable status on the securities market and the inadmissibility of applying additional regulations.