Lithuanian Crowdfunding License

1. Pre-application Planning
We begin by solidifying your platform’s business model: will you do lending, equity, or both? What types of projects (e.g., startups, real estate, green energy SMEs)? This affects the documentation focus. We also ensure you have a Lithuanian entity set up (likely a UAB) to be the applicant. If not, we’ll incorporate it. Minimum capital €25k must be subscribed (not necessarily fully paid-in at application, but must be before license). We can structure shareholding optimally at this stage (if you have VC investors, etc., ensure clarity in ownership).
 

2. Preparation of Application Package
The EU regulation (and a BoL checklist) details what to submit:

- Program of Operations
A detailed description of how your platform will function. We’ll describe the platform’s workflow: onboarding investors (KYC process), onboarding project owners (due diligence process), how projects are listed (criteria, any scoring mechanism), how investments are made (funds flow), contract signing (loan agreements or share subscriptions), and how repayments or dividends flow back. We must clarify whether you’ll have a separate payment institution handling money or doing it under your own license carve-out. We also detail any additional services (like if you provide project evaluation or advisory to project owners).
 

- Business Plan and Financials
Projections for at least 3 years. Include expected volume of funds raised, revenue model (platform fees from project owners, maybe success fees from investors?), operational costs. We justify how the initial capital €25k suffices given those projections or if more is needed (the regulation requires own funds >= 25k + 0.2% of amount by which outstanding loans exceed €5m, so we forecast if/when you might exceed €5m and ensure you plan to retain earnings to meet that).
 

- Governance and Management
We provide info on management: at least one director is needed; best practice two. They require good repute and sufficient crowdfunding/financial/business experience. We gather CVs, police clearance, etc. Also information on shareholders >20%. We prepare “Persons Responsible for Management” forms for each (the regulation specifically says they must be of good repute and competence). If your team lacks a certain skill (say, no one has lending experience), we might bring an advisor or independent board member to cover that.
 

3. Operational Policies
There are specific policies required by regulation:

• Investor onboarding and Knowledge test: Policy on how you will administer the required entry knowledge test for non-sophisticated investors who want to invest beyond certain amounts. We define the questionnaire, passing criteria, and how results are stored.

• Risk Management: How do you ensure projects are not too risky or at least risks are disclosed? (Crowdfunding regulation doesn't limit project risk but expects you to inform investors and have processes to possibly do credit scoring for loans). If you facilitate loans, what happens if a borrower defaults? We must show a policy for handling defaults and assisting investors with recovery (though you’re not required to provide a buyback or insurance, you should have e.g., a debt collection procedure).

• Conflicts of Interest policy: Regulation prohibits certain conflicts (like you cannot crowdfunding your own company beyond €* amount, or your management can’t be project owners). We draft a policy showing compliance: e.g., we won’t list projects by related persons, etc., and if minor conflicts, how we disclose/manage them.

• Complaint Handling procedure: A detailed process to handle investor and project owner complaints within the specified timelines (15 business days for reply, per regulation).

• Business Continuity Plan: Very crucial – regulation requires a plan ensuring that critical services can continue if the platform ceases (either due to failure or technical downtime). This includes having arrangements to service existing loans until maturity if you shut down. Often this means having an agreement with a backup servicer (like another crowdfunding platform or a loan administrator) who can take over outstanding contracts. We will draft a plan and likely a preliminary agreement with a backup servicer.

• Outsourcing Arrangements: If you outsource any function (say, customer ID verification, or payment processing to an EMI), detail those, ensure compliance with EBA outsourcing guidelines.

• IT Security and Data Protection: The platform will handle personal data and transactions, so BoL will want an ICT risk management description (very similar to other fintechs). We provide description of your platform architecture, security measures (encryption, 2FA, cybersecurity, etc.), and compliance with GDPR for user data.
   

4. Key Investment Information Sheet (KIIS) Template
You must provide a template of the KIIS you will use for projects. We will draft a template that meets regulation Annex requirements, which you’ll fill per project. BoL will review if your template covers all required info (project description, risk factors, type of security/loan, investor rights, fees, etc.).
 

5. AML/KYC Policy
Though crowdfunding is not as heavily AML-regulated as banks (unless you do payment services beyond just matching parties), you still need KYC on project owners and investors (to comply with AML laws as a financial institution). We prepare an AML policy addressing risk-based approach, checks (especially for project owners receiving funds), ongoing monitoring for suspicious transactions (like unusual investor behavior that could be money laundering). Lithuania is strict on AML, so BoL will want to see that policy.
 

6. Insurance
The regulation suggests either €25k capital or equivalent professional indemnity insurance (PII). If you choose PII to cover some risks (or if capital is small, sometimes PII is recommended), we can include evidence of such insurance or at least an intent to obtain it. Many platforms add PII to protect against negligence claims.
 

7. Fees Structure and T&Cs
Likely BoL will want to see what fees you charge and your draft terms of service for users. We prepare a schedule of fees and user agreement. Also, we ensure you clarify how funds flow (for e.g., do investors pre-fund an account or pay per investment via each transaction, etc.).
 

8. Submission to Bank of Lithuania
We compile all required documents (in English or Lithuanian – BoL accepts English for most, but certain official forms might need Lithuanian, we handle translations). Pay the application fee (~€500 or as set by local regulation). BoL will confirm receipt and within 10 working days usually inform if anything is missing. If complete, they formally accept and the 3-month clock starts.
 

9. Regulator Review & Q&A
The BoL will coordinate with relevant units (fintech licensing team, IT risk, etc.). They might ask questions such as:

• Details on backup servicer arrangement (they will likely want an actual contract or at least an MoU ready, as continuity is key).

• More info on how you assess project risk (e.g., do you check credit scores of borrowers? what if a startup with no history – do you at least vet their business plan? They want to ensure you do some duty of care for projects listed and not list obvious scams).

• Clarification on how you prevent conflicts: for instance, if your platform also co-invests in projects or your management invests, how disclosed.

• They might test your knowledge: ensure you know the €5 million offering limit per project (if project needs more, can’t raise beyond that in one year across EU).

• Possibly an interview with management about their experience and roles.

• IT specifics: e.g., what happens if your platform is hacked or goes down? Walk through your disaster recovery step by step.

• If using an external payment service for fund movements, show that it’s licensed (they may want a copy of EMI/PI partner’s license).

• They will certainly ensure your investor knowledge test and risk warnings meet the regulation's bar (we align them with ESMA guidelines).
   

We respond promptly to each inquiry, providing additional documents or amending policies as needed. Given the 3-month decision period, queries usually come quickly. We aim to satisfy everything so BoL doesn't need to “stop the clock” for major deficiencies.
 

10. Authorization & Notification
Once BoL is satisfied, they grant the Crowdfunding Service Provider license. They will notify ESMA to include your platform on the ESMA register of authorized ECSPs (transparency measure for cross-border use). They also likely send notifications to other EU regulators that you are authorized (or that happens through ESMA’s system) – so you can passport immediately without separate process (the regulation’s beauty is automatic EU passport).

We ensure you pay the license issuance fee if any. Also BoL may ask just before license to show final evidence of capital being in company bank account and any other last condition (like if we said we'll sign backup servicer contract upon license, they may insist it's signed).
 

11. Post-licensing Launch
We help with final operational setups:

• Registration with Centre of Registers that company has this licensed status (the BoL license is primary, but sometimes local register needs an activity update).

• Implementation of your client onboarding and scoring systems as per approved policies. If needed, we connect you with KYC providers or credit info providers.

• Establishing reporting routines: The regulation requires annual reporting to BoL including volumes, any defaults, complaints summary, etc. We prepare templates for you to capture data from day one to make those reports easy.

• We advise on marketing compliance: under the regulation, any marketing to investors must be fair and clear. We review your website/app content to ensure compliance (no misleading ROI promises, etc.). Also any marketing in different EU countries might need a local language, etc., we guide on that per regulation’s cross-border marketing rules.

• Ongoing compliance support: we can act as your outsourced compliance advisor, performing periodic checks e.g., ensuring each project has a KIIS uploaded, etc., so you stay fully compliant and maintain investor trust and regulator satisfaction.