Associate Katri Remmelgas comment in Delfi Ärileht: When does a conventional loan arrangement become regulated capital raising?

When does a conventional loan arrangement become regulated capital raising? Delfi Ärileht examines the case of a Latvian entrepreneur who is an Estonian e-resident and whose companies raised nearly EUR 100 million from thousands of retail investors across Europe. The activities of the companies have attracted the attention of financial regulators in several jurisdictions, while one Estonian company has entered restructuring proceedings.
WALLESS Associate Katri Remmelgas explains that, from a regulatory perspective, substance prevails over form. The title of an agreement is not decisive. The assessment must consider the economic substance of the transaction, the investor base, the scope of the offer and the terms on which funds are raised. Depending on the circumstances, raising funds through standardised loan agreements may triger an obligation to prepare a prospectus and register it, or may give rise to authorisation requirements.

Read Katri’s comments in Delfi Ärileht (in Estonian): https://rebrand.ly/635734