Legal Updates

Issuance of shares under a crowdfunding process requires a prospectus

September 18, 2016
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Published in Afik News 214 28.09.2016

A company established an online investing platform by which an investor may invest in high-tech companies in the method of "crowdfunding".

The Court held that the company issues shares by way of crowdfunding which significantly jeopardizes the funds of the investors who purchase securities without existence of a prospectus to the public. Market to non-sophisticated investors without any supervision or publication of a prospectus may cause severe damage to the investors. Therefore, if the company wishes to offer securities to investors it must publish a prospectus prior to the proposal.

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