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In the operations of the Balkanika crowdfunding platform, the fiduciary (escrow) account holds essential legal, operational, and investor protection significance.
Who are the involved parties?
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According to the legislation of the Republic of Moldova and Balkanika’s internal regulations, investors transfer their funds to a special bank account, known as a fiduciary (escrow) account, opened with a licensed commercial bank under the strict supervision of the financial institution hosting the account and the national supervisory authority (CNPF).
In line with Art. 12 para. (3) of Law No. 181/2023 of the Republic of Moldova on crowdfunding services, Balkanika, as a crowdfunding service provider, maintains a special fiduciary account at a licensed bank in Moldova. This account is exclusively used for inflows and outflows directly related to crowdfunding activities. The funds in this fiduciary bank account cannot be subject to enforcement proceedings against the provider and cannot be claimed or included in the provider’s debtor estate in case of insolvency.
Thus, although the fiduciary bank account is owned by the Balkanika platform, the funds deposited in it remain the property of the investors; neither the bank nor the platform can use them without distinct authorization and the fulfillment of specific conditions.
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The funds in the fiduciary account are segregated from the platform’s assets, ensuring investor protection. It is a distinct bank account managed by a commercial bank (an authorized financial institution), where investors’ funds are held until the successful completion of a fundraising campaign.
This mechanism prevents the platform or the project developer/consumer debtor (potential borrower) from accessing the funds before the contractual conditions are met.
By using a fiduciary account, Balkanika assures investors that their money is not misused or subjected to fraud.
Transparency and control over financial flows enhance trust among investors, the platform, and developers/consumer debtors (borrowers).
In accordance with Moldovan regulations and international best practices in crowdfunding, Balkanika ensures investor fund protection, including through the use of this fiduciary (escrow) account mechanism.
The use of the fiduciary account reflects Balkanika’s alignment with national and international compliance and transparency standards.
Project Launch and Investment Decision:
The developer (a legal entity or, under certain conditions, a natural person) submits an investment request (loan offer) to be published on the platform.
Fund Deposit into the Fiduciary Account:
The investor analyzes the offer, signs the investment decision, and authorizes the transfer of their own funds into the fiduciary account for capital accumulation. Investment amounts are transferred online to the fiduciary account. The platform’s accounting system is automatically synchronized with that of the bank in which the funds are deposited.
Monitoring Capital Accumulation:
The platform informs investors and potential borrowers about the campaign's progress. Investors can view their account and track how much has been accumulated until the target is reached during the offer’s validity period (consumer loan offers have a maximum fundraising term of 6 months; project offers from developers have a term set on the platform by the developer, not exceeding 12 months).
Funds are blocked until the target amount (minimum or maximum) is reached and the project is approved for financing. Investor funds remain entirely in the fiduciary (escrow) account until the conditions of the developer’s/consumer debtor’s offer are met.
Campaign Closure and Fund Allocation:
If the fundraising campaign is successful, the funds are transferred to the developer/consumer debtor (borrower). Once the target is reached, the fiduciary account is unblocked. Balkanika then concludes the loan agreement and transfers the accumulated amount to the borrower, deducting the agreed commission paid by the borrower for the provided services. The loan agreement includes a list of all investors and their respective contributions.
If the goal is not reached or the project is canceled, the funds are returned to investors. Thus, the fiduciary (escrow) account serves as a transaction guarantor: if the target is not reached, the amounts are returned to investors without any fees; only upon full fundraising are the escrow funds transferred to the borrower.
The bank executes the transfer from the fiduciary account only after verifying Balkanika’s orders (following the conclusion of the loan agreement and registration of the mortgage, if applicable).
Loan Execution Stage:
After the funds are transferred from the fiduciary account to the borrower, the loan enters the repayment phase. The borrower begins repayments to Balkanika according to the agreed schedule and loan agreement. The platform then distributes the principal and interest to each investor according to the investment decision and the master crowdfunding service agreement.
In case of non-payment by the borrower, Balkanika initiates recovery procedures (including judicial steps) and informs investors about the measures taken.
The fiduciary account used by the Balkanika Platform in crowdfunding transactions is:
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Author: Igor Cristal, Legal Expert, Balkanika