The Exemption Provisions of the German Retail Investor Protection Act

This article examines the effects of the exemption provisions of the Retail Investor Protection Law introduced in summer 2015. Through stronger regulation, the German Retail Investor Protection Act is intended to provide more transparency for investors on the gray capital market. However, the law also contains exemption. These release both companies that finance themselves through a crowd-investing platform as well as social, charitable and religious projects from the obligation of producing a prospectus for the financing of asset investments. The basis for the article’s research on these exceptions is the crowd-investing database, a survey among social and non-profit organisations as well as consultation of experts. About one year after the introduction of the German Retail Investor Protection Law, it can be concluded there are no strong effects on the market for crowd financing in Germany. The analysed data also show that investment behaviour has not changed as a result of the newly introduced obligation to self-report on the income and assets of investors.