ITALIAN LEGISLATION

Italy was among the first countries to adopt equity crowdfunding legislation. This form of crowdinvesting implies the online subscription via portals for a capital share of a company that individual Investors want to finance. Accordingly, through equity crowdfunding, the Investor buys shares of the Offeror companies and becomes its shareholder.

Capital is collected through online portals managed by CONSOB-authorized subjects who, after assessing the legal requirements, deliberate their entry in the Portal Manager Registry, pursuant to art. 50-quinquies of the TUF, available at the following link, and divided into two sections:

an ordinary section, which includes the CONSOB-authorized Portal Managers, follows the positive assessment of the aforementioned requirements; 

a special section that records the "legal managers" (investment firms, banks, brokerage firms, and other subjects) who have informed CONSOB about their portal management activity receiving back its authorization, prior to the start of operations.

The possibility of using this innovative form of financing was initially limited to "innovative start-ups," a particular category of company introduced into our legal system by section IX (arts. 25 to 32) of Law Decree No. 179 dated October 18, 2012, establishing "Further urgent measures for the growth of the country", later converted into Law No. 221 dated December 17, 2012 (known as "Growth Decree 2.0"). The special section of the Company Register relating to innovative start-ups can be found at the following link.

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

In art. 26 of Growth Decree 2.0, some exceptions to corporate law were also provided for innovative start-up companies set up in S.r.l. form. 

The legislator also entrusted CONSOB with the task of regulating specific aspects of equity crowdfunding. Following a public consultation, the Supervisory Authority issued with resolution No. 18592 dated June 26, 2013 the "Regulation on Risk Capital Funding Through Online Portals" (CONSOB Regulation).

In 2015, the possibility of raising capital online was then extended to "innovative SMEs." This new, special category of companies has been introduced into our legal system by art. 4 of Law Decree No. 3 dated January 24, 2015, converted into Law No. 33 dated March 24, 2015 (known as Investment Compact). Such possibility was also granted to "collective investment bodies and other companies that invest mainly in innovative start-ups or innovative SMEs." 

This intervention by the primary legislator was followed in February 2016 by the update of the CONSOB regulation on equity crowdfunding, again after a public consultation.

With the entry into force of the 2017 Stability Law, the possibility of raising risk capital through equity crowdfunding portals has been further extended to all "small and medium-sized enterprises," as defined by European Union legislation. This step has facilitated the rise of real estate equity crowdfunding. Legislative Decree No. 129 dated August 3, 2017 implemented the "MiFID II" directive, entered into force on January 3, 2018, further changing the TUF equity crowdfunding provisions. Such changes were then implemented in the new version of the CONSOB Regulation, enforced since January 2018.

Finally, the 2019 Budget Law provided for the possibility of using the authorized portals to publicly offer debt financial instruments (in particular bonds and debt securities) issued by companies having the requirements to be considered SMEs (debt crowdfunding). The new paragraph 1-ter of art. 100-ter of the TUF provides that the subscription of bonds and debt securities issued by SMEs: (i) can take place "within the limits established by the Italian Civil Code," (ii) is restricted "to professional investors and particular categories of investors, possibly identified by CONSOB," and (iii) is conducted "in a separate section of the portal, different from where risk capital funding takes place."

Following a public consultation held between June 20 and July 20, 2019, CONSOB approved important changes to its own Regulation on October 10, 2019. In particular, these changes aimed implementing primary level changes into the secondary regulation. The new CONSOB Regulation also allows operators to set up, in a separate portal section, an electronic bulletin board (following what are known as "bulletin boards," long-implemented by other EU States). This is meant for expressions of interest in the sale and purchase of financial instruments that have been the subject of successfully completed portal campaign offers.

Consob, with the Resolution of 6 February 2020, has updated the Regulation with the amendments made to Article 50-quinquies of the Consolidated Law on Finance by Legislative Decree no. 165 of 25 November 2019 (the so-called "MiFID correction").

These amendments to the TUF are aimed at eliminating some requirements of the Operators, meaning that only insurance covers has been maintained.

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.

UE LEGISLATION

In the panorama of EU law, after a process of more than 2 years, on 5th October 2020, the European Parliament came to the approvation of the Regulation on European Crowdfunding Service Providers (ECSP) for business.

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

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

The European Regulation aims to standardize investors' protection and portal management rules for all equity and lending crowdfunding platforms that will obtain the EU licence issued by the European Financial Markets Authority (ESMA).

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

The new law provides for clear information and transparency for crowdfunding portals to protect investors. In this sense, the project owner is asked to draw up a Key Investor Information Sheet (KIIS), which must be prepared for each project and distributed to all investors and lenders of the project.

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