[Newsletter n. 17]

Italy has been the first EU Member State to equipe itself with a regulation for equity crowdfunding in 2013 (Consob Regulation no. 18592 of 26 June 2013) (“Crowdfunding Regulation”) and now a further step to foster this successful financing tool has been added to the existing infrastructure.
On 25 October 2019, the Crowdfunding Regulation has been supplemented by Consob Resolution n. 21110 of 10 October 2019 to take on board the changes introduced by the 2019 Italian Budget Law (Law No. 145/2018) to the Italian Financial Act (TUF) (see our Newsletter n.15 ).

In particular, we have highlighted three main areas of interest concerning the amended Crowdfunding Regulation.

(A) Extension of the offer through on-line platforms to bonds and other debt instruments
The definition of “crowdfunding” has been broadened to include on-line platforms that facilitate fund raising throughthe offer of not only equity but also bonds or other debt instruments (see amended Article 1(5-novies) of TUF).
As a consequence, the Regulation has changed its name from “Regulation on raising of risk capital through on-line platforms” to “Regulation on capital raising through on-line platforms”, thus deleting the reference to equity,  and it allows the offer of debt instruments issued by SMEs through such portals, to the extent that a separate section of the platform than that one dedicated to offers of equity instruments is used.

(B) New categories of eligible investors.
With reference to debt instruments issued by public limited company (società per azioni), Consob has identified in Article 24 (2-quater) of the amended Crowdfunding Regulation three new categories of investors that are entitled to subscribe in addition to professional investors :

a) non-professional investors whose investment portfolio is more than 250,000 Euro, including cash deposits;
b) non-professional investors undertaking to invest at least 100,000 Euro in a single offer, who will acknowledge in writing that they are aware of the risks involved by their commitment or the expected investment;
c) non-professional investors executing the subscription in the context of the investment services of portfolio management or investment advice.

Platforms’ managers shall conduct a check on the level of competence and knowledge of the investors also by using declarations issued by banks or investment firms providing the value of the portfolio or the suitability statements issued by the intermediary that provided the service.

Those new categories of investors will benefit of certain enhanced mechanisms of protection concerning, inter alia, the withdrawal right.

Differently, as regards debt instruments issued by private limited liability companies (società a responsabilità limitata) , the limitation set forth by Article 2483 of Italian Civil Code remains applicable and the subscription of bonds or other debt instruments issued by such companies is still precluded to investors other than professional clients.

(C)  Secondary market
A further novelty concerns the possibility to host an electronic bulletin board dedicated to the publication of expressions of interest to buy and sell financial instruments that have been successfully offered through a crowdfunding campaign on the same platform.
Such restrictions to financial instruments already offered on the same platform is grounded on the relationship between the issuer and the manager in light of the business model adopted by crowdfunding platforms’ managers.
During the consultation phase, some concerns has been raised in terms of qualification of such secondary dealings as trading venues. To avoid doubts, the Regulation has introduced certain requirement to differentiate the management of such bulletin boards from the management of a MTF or OTF and/or the provision of investment services. Consequently, the publication of expressions of interest must take place:

(i) without any use of technological system aimed at allowing the matching between bid and offer,
(ii) avoiding that any contract concluded between investors can be considered the outcome of matching operated by the manager,
(iii) precluding the manager to carry out any form of facilitation for contracts closing, such as the provision of templates or forms to conclude contracts.

Furthermore, considering that the Crowdfunding Regulation applies only to Italian on-line platforms, the manager shall not solicit residents of other EU countries to make investment on its platform. In this respect, it is not automatically excluded that investors from other EU countries may subscribe to offers through Italian platforms by their own initiative (so-called “reverse solicitation“). However, in the absence of a harmonized European legal framework, this possibility is strictly dependent on the national law in force in the country of the potential investor and therefore, it should be assessed with extreme care.

Please do not hesitate to contact us should you need any further clarification on the above and any other FinTech related matters.


Vito Vittore

Elena Pagnoni

Massimiliano Silvetti

Roberta Talone