December 15, 2023
We're excited to announce that Afranga has been granted a European crowdfunding service provider license!
To ensure we're fully compliant with the license, we are required to make some changes to our platform. This article provides essential information about the transition from our current setup to a regulated crowdfunding services provider.
This September, Afranga received a license from the Bulgarian Financial Supervision Commission (FSC) to operate as a European crowdfunding service provider (ECSP).
We have been in close discussions with the regulator about the necessary changes to make the platform fully compliant with the license. We are currently in a transition phase, during which both our existing setup and the new platform will operate in parallel.
Continue reading to learn more about the upcoming changes.
To comply with our new license, we'll have to implement some changes to our platform. During this adjustment period, new registrations and investment activities on afranga.com will be suspended.
We will move our existing marketplace to a new web address, stikcredit.eu, where current investors can access their accounts and continue transactions seamlessly.
Please note that stikcredit.eu will remain under the operation of Stik-Credit AD, the same legal entity you agreed with when registering your account on Afranga. You can continue to buy claims via assignment agreements and sell your existing investments on the secondary market.
Investments in new loan claims on stikcredit.eu will be available until the revamped afranga.com platform is launched. The legacy platform, stikcredit.eu, will remain active until all loans on the marketplace are fully repaid. You will have access to the website and you'll be able to trade your investments on the secondary market.
As part of our licensing process, we have established a new legal entity, Afranga eood, which has acquired the ECSP license from the FSC. Stik-Credit AD has transferred the Afranga trademark, platform software, all intellectual property, and other rights to Afranga eood.
This business separation offers several advantages to investors and will unlock the potential of the platform for further growth.
Why is this necessary?
According to our license, Afranga is not allowed to carry out any business activity not related to crowdfunding services. To continue the normal operation of the platform, we're required to spin-off Afranga into a separate legal entity.
Who will run the new company?
The experienced team that developed Afranga.com under Stik-Credit AD will transition to Afranga eood, continuing our mission of democratizing finance.
The sole owner of Afranga eood is Svetlin Sabev who has been the main driving force behind the Afranga project. Svetlin will serve as a CEO of the newly formed entity and will guide the organization into its next phase.
Yonko Chuklev, the current COO, will become Chief Compliance Officer. Yonko holds a master’s degree in law and has an extensive professional experience in Anti-Money Laundering and KYC procedures. Yonko is the right person to make sure that Afranga adheres to the highest regulatory standard.
The investment process will remain largely unchanged, except for a few minor adjustments.
Instead of investing in claim rights via an assignment agreement, Afranga will list Business loans. These loans will be extended to loan originators after successful funding and will be repaid in installments according to the repayment schedule. Investors will enter into a loan agreement with the loan originator.
Each business loan will be secured by a pledge on a portfolio of performing loans (or other assets depending on the Borrower's business). In the unlikely event of default, Afranga will use this security to recover investors' funds.
Repayment of outstanding loans
Investors with current investments in claims will receive repayments as scheduled. These will be accessible in your stikcredit.eu account, and uninvested funds can be withdrawn at any time.
The stikcredit.eu marketplace will remain operational until all claims are repaid and all investor funds are withdrawn.
Investing into new loan claims
Until we launch the upgraded afranga.com platform, you will be able to invest into new loan claims on stikcredit.eu. The investment option will be disabled once afranga.com is live.
This means that once we complete the transition, you will no longer be able to invest into loan claims under the existing setup.
Investors can sell their existing investments on the secondary market as long as there are active loans on stikcredit.eu.
Tax withholding for investments in Business loans
When private individuals or companies invest into Business loans, we will be legally required to deduct a withholding tax from their income. Under certain conditions, an investor will be able to reduce this tax rate to 0%, depending on the investor's tax residency and applicable double tax treaty.
We understand that tax related information is of critical importance to investors and we will provide more details in a dedicated article.
We aim to answer all your queries regarding these changes. If you have any questions, you can submit them here, and we'll answer the most popular investor questions in a dedicated article.
Our aim is to launch the upgraded afranga.com platform in the 1st quarter of 2024. Stay tuned for more information.