Italy finally (and legally) leads the global crowdfunding pack with the implementation of the first equity crowdfunding law in the world – the Decreto Crescita Bis, or the Italian “Growth Act 2.0.”
The Italian parliament voted for the implementation of a crowdfunding law last December 17, 2012. It then tasked the Commissione Nazionale per le Società e la Borsa (CONSOB), the equivalent of the Securities and Exchange Commission in the U.S., to issue the applicable regulatory provisions necessary for the implementation of the bill. And now, finally, our intel at the CONSOB has confirmed the law was just signed by its five commissioners (equivalent to our five SEC commissioners). You will be able to equity crowdfund right after publication of the law in a week or so.
The provisions of the bill focus on innovation as a structural factor of sustainable growth and it means to enhance the competitiveness of enterprises in Italy. The provisions introduce, for the first time, legislative frameworks that encourage the creation and growth of innovative startups.
The law says that for general solicitation:
- An offering must receive 5% investment by a professional investor or some specific CONSOB-registered institution to complete crowdfunding.
- The maximum raised cannot exceed €5 million per year.
- Individual investments must be concluded by broker-dealers to comply with anti-laundering laws and the E.U. Markets in Financial Instruments Directive (MiFID). This dictates that your investment profile match your proclivity to risk investments. But there will be an exemption for small investments.
There are positive changes to the law that we just learned:
- Professional investors and CONSOB-registered firms need to own 5% of a crowdfunded firm after the crowdfunding and not before as previously dictated.
- There will be MIFID exemptions for investments lower than €500; thus lowering cost and red tape.
Under Italian law as well as for Europe in general, professional or "accredited" investors are defined by the E.U. MiFID, Schedule 2, as individuals or organizations who possess the experience, knowledge and expertise to make investment decisions and properly assess risks. Those who are not professional by law (like banks, investment firms, investment funds, public entities, large undertakings, etc.) may be accredited subject to a case-by-case assessment of the experience, knowledge and expertise of the client. That can be satisfied if the investor meets at least two of the following criteria::
- Having carried out market transactions at least €50,000 at an average of 10 transactions per quarter for a year.
- Having a financial instrument portfolio worth more than €500,000.
- Having worked in a professional position relevant to the transactions envisaged, and in the financial sector.
The Soho Loft has been monitoring crowdfunding developments in Italy. We are working closely with leading platforms and broker-dealers in Italy, as well as with several Italian banks that are looking for strategic partners. Stay in touch with us to be part of this latest step forward for equity crowdfunding.
Reference: Il Sole 24 Ore, 5 Luglio 2013