Community legislation
After a process of more than 2 years, on October 7, 2020, the European Parliament came to the long-awaited final approval of the European Regulation on European Crowdfunding Service Providers for Business (ECSP), which entered into force on November 10, 2021.
This Regulation applies as of November 10, 2023 to all European Crowdfunding Service Providers for business (ECSPs) up to offers of €5 million, calculated over a 12-month period for each project holder under funding. The regulation does not apply to people using crowdfunding for personal reasons (i.e., not for their commercial, professional, or entrepreneurial activity) or for campaigns whose value exceeds €5 million, which are regulated by the Financial Markets Directive 2014/65/EU and Regulation (EU) 2017/1129 on prospectuses to be published when securities are offered to the public or admitted to trading.
The European Regulation, the application of which is also ensured by the implementing acts adopted by the European Commission, as well as by the relevant delegated acts, aims to standardize investor protection and portal management rules for all equity, debt and lending crowdfunding platforms that will obtain authorization from the competent authority of the member state in which they are established and, for effect, will be registered in the Register of Crowdfunding Service Providers established at 'the European Securities and Markets Authority (ESMA).
Thus, the intention is to establish "a European brand for crowdfunding platforms based on investment and lending that enables cross-border activities."
The new law requires crowdfunding portals to draft clear information and transparency to protect investors. In this regard, it is stipulated that the project owner must prepare a KIIS (investment information sheet) for each project and distribute it to all investors and lenders of the project. In addition, the European Regulation has (i) broadened the list of possible Issuers, no longer limited to SMEs and start-ups, but extended to any person, natural or legal, acting for commercial or professional purposes, and (ii) excluded shares of collective investment schemes from the list of instruments that can be offered through the platforms.
The national legislation
This intervention of the EU legislature was followed by Legislative Decree No. 30 of March 10, 2023, implementing Regulation (EU) 2020/1503, which introduced into the Consolidated Law on Finance (TUF) a new definition of "crowdfunding services" in paragraph 5-novies of Art. 1, i.e., the matching of interests in financing economic activities of investors and project owners through the use of a platform, which consists of one of the following activities: (i) intermediation in the granting of loans; (ii) placement without irrevocable commitment of securities and instruments admitted for crowdfunding purposes, issued by project owners or special purpose vehicles, and reception and transmission of customer orders with respect to such securities and instruments.
The Legislative Decree then introduced additional amendments to the TUF provisions on crowdfunding, such as:
The insertion of a new Article 4e. 1, which identifies CONSOB and the Bank of Italy as the competent national authorities under the European regulation and regulates their powers and responsibilities;
The repeal of Article 50d, which defined and regulated the activities of portal operators under the previous legislation;
The amendment to Article 100b, paragraph 1 of which has been rewritten to allow that, today, shares in limited liability companies can also constitute, including through crowdfunding platforms the subject of public offerings of financial products, and the rewording of its paragraph 2, regarding the alternative subscription and subsequent disposal regime of shares representing the capital of limited liability companies;
The rewording of Article 190, on administrative pecuniary sanctions on intermediaries, and Article 190c, on administrative sanctions on crowdfunding services, to bring them in line with the new legislation.
With Regulation No. 22729/2023 of June 1, 2023, CONSOB also implemented the European Regulation and Articles 4 sexies. 1 and 100b of the TUF, as amended by the aforementioned Legislative Decree (the "CONSOB Regulation").
Specifically, Article 12 of the CONSOB Regulations requires that for each crowdfunding offer, the authorized provider shall publish, in addition to the information required by the European regulations:
(i) an indication of the alternative regime, if any, for the transfer of shares representing the capital of limited liability companies provided for in Article 100-ter, paragraph 2, of the Consolidated Law and the relevant procedures for exercising the option to choose the regime to be applied;
(ii) for each offer of bonds or debt securities an indication of how the limits set by Articles 2412 and 2483 of the Civil Code have been complied with, which is the responsibility of the provider to verify pursuant to Article 13 below.
In Part IV, some rules on marketing communications were then provided.
The updated version of the CONSOB Regulations can be found at the following link.
For more details, please refer to the "investor education" section of CONSOB's website at the following link.
Prior to the entry into force of the European Regulation and its implementing legislation, recall that Italy was among the first countries to adopt equity crowdfunding legislation.
Among the first provisions introduced by the domestic legislature related to equity crowdfunding were the introduction of the aforementioned paragraph 5-novies of Article 1, which defined what an equity crowdfunding portal was, and Article 100-ter, which regulated public offers of financial instruments conducted through portals.
These interventions had been followed by the issuance of the "Regulations on the Raising of Venture Capital through Online Portals" adopted by Resolution No. 18592 of June 26, 2013, which has long been the benchmark implementing text for the regulation of capital raising through online portals in Italy and now fully replaced by CONSOB Regulation No. 22729/2023 of June 1, 2023.