Regulation

National Regulations

National Regulations Italy was one of the first countries to adopt legislation on equity crowdfunding, a form of crowdinvesting that involves online subscription, through internet portals, of shares in the share capital of companies that individual investors wish to finance. Through equity crowdfunding, therefore, investors subscribe to shares of offering companies, becoming shareholders.

Capital raising takes place through online portals managed by entities authorized by Consob (Italian Securities and Exchange Commission) which, after evaluating compliance with the requirements of applicable regulations, approve their registration in the Register of Portal Managers, as provided for by Article 50-quinquies of the Consolidated Financial Act (TUF), available at the following link, and divided into two sections:

an ordinary section, where portal managers authorized by Consob following a positive verification of compliance with the above-mentioned requirements are registered;

a special section, where "legal managers" (investment firms, banks, SIMs, and other entities) are registered, who have notified Consob, before the start of their operations, of their intention to manage a portal and have obtained authorization to do so from Consob.

Initially, the possibility of using this innovative form of financing was limited to "innovative start-ups", a particular category of companies introduced in Italy by Section IX (Articles 25-32) of Decree Law of October 18, 2012, no. 179, entitled "Further urgent measures for the country's growth", later converted into Law no. 221 of December 17, 2012 (known as "Growth Decree 2.0"). The special section of the Business Register relating to innovative start-ups can be found at the following link.

In particular, Article 30 of Growth Decree 2.0 introduced, in its first three paragraphs, some new provisions in the Consolidated Financial Act ("TUF") relating to equity crowdfunding, namely: (i) paragraph 5-novies of Article 1, which defines what an equity crowdfunding portal is, (ii) Article 50-quinquies, which defines and regulates the activity of portal managers, and (iii) Article 100-ter, which regulates public offers of financial instruments conducted through portals.

Article 26 of Growth Decree 2.0 also provided for some derogations from company law for innovative start-up companies established as limited liability companies (S.r.l.).

Furthermore, the legislator entrusted Consob with the task of regulating specific aspects of equity crowdfunding, and following a public consultation, the Supervisory Authority issued Resolution no. 18592 of June 26, 2013, the "Regulation on the raising of risk capital through online portals" (the "Consob Regulation"), which has been progressively updated with subsequent supplementary and/or amending resolutions, up to the currently applicable text. The Regulation (referred to on this website as the "Consob Regulation") represents the implementing reference text for the regulation of capital raising through online portals in Italy.

In 2015, the possibility of raising capital online was then extended to "innovative SMEs", another special category of companies introduced in Italy by Article 4 of Decree Law of January 24, 2015, no. 3, converted into Law no. 33 of March 24, 2015 (known as the "Investment Compact"), as well as to "collective investment undertakings for risk capital and other companies that mainly invest in innovative start-ups or innovative SMEs".

This primary legislative intervention was followed, in February 2016, by the revision of the Consob Regulation on equity crowdfunding, preceded in this case by a public consultation.

With the entry into force of the 2017 Stability Law, the possibility of raising venture capital through equity crowdfunding portals was further extended to all 'small and medium-sized enterprises' as defined by European Union legislation, allowing for the emergence of Real Estate Equity Crowdfunding. Legislative Decree No. 129 of August 3, 2017, implementing the "MiFID II" directive and effective as of January 3, 2018, then introduced further amendments to the provisions of the Consolidated Financial Act (TUF) on equity crowdfunding, which were incorporated into the version of the Consob Regulation in force since January 2018.

The 2019 Budget Law finally provided for the possibility of using authorized portals to make public offers of debt financial instruments (in particular, bonds and debt securities) issued by companies that meet the criteria to be considered SMEs (debt crowdfunding). The new paragraph 1-ter of Article 100-ter of the TUF therefore provides that the subscription of bonds and debt securities issued by SMEs: (i) can take place "within the limits established by the Civil Code", (ii) is reserved for "professional investors and particular categories of investors possibly identified by Consob", and (iii) is carried out "in a separate section of the portal different from the one where the equity capital raising takes place".

Following a public consultation held between June 20 and July 20, 2019, Consob approved some important changes to the Consob Regulation on October 10, 2019, which are mainly aimed at implementing the new provisions introduced by the primary legislation at the secondary regulatory level. The new Consob Regulation also provides for the possibility for managers to establish an electronic bulletin board (similar to the so-called "bulletin boards" already implemented in other EU Member States for years) in a separate section of the portal, for the publication of expressions of interest in the buying and selling of financial instruments that have been successfully offered within a specific campaign on a certain portal.

Finally, on February 6, 2020, Consob made some changes to the Regulation in order to align it with the amendments made to Article 50-quinquies of the TUF by Legislative Decree No. 165 of November 25, 2019 (so-called "MiFID corrective measure").

These amendments to the TUF are aimed at removing, among the capital requirements required for portal managers to be registered in the special register kept by Consob, the requirement for membership in an investor compensation system. In this way, only the obligation of insurance coverage has been retained.

With this opportunity, the content of the register of portal managers has been updated, with particular reference to the (recently expanded) activities that these managers can carry out.

The updated version of the Consob Regulation can be found at the following link.

For further information, please refer to the "investor education" section of the Consob website, available at the following link.

The European Community Regulations

In the landscape of European law, after a process that lasted over 2 years, on October 5, 2020, the European Parliament finally approved the European Regulation concerning European Crowdfunding Service Providers for business (ECSP).

This European Regulation will apply to all European Crowdfunding Service Providers for business (ECSP) for offerings up to 5 million euros, calculated over a 12-month period for each project owner seeking funding.

The rules will start to be applied one year after their publication in the Official Journal of the EU.

The European Regulation aims to standardize investor protection and portal management rules for all equity and lending crowdfunding platforms that obtain a community license issued by the European Securities and Markets Authority (ESMA).

The intention is to establish "a European label for investment and lending-based crowdfunding platforms that enables cross-border activities."

The new law requires crowdfunding portals to provide clear and transparent information to protect investors. In this sense, project owners are required to prepare an investment information sheet (KIIS) for each project, which must be distributed to all investors and financiers.