Italy has just circumvented the delay of the US in changing its laws in order for crowdfunding for equity to become a functional law and has now become the first country in the world to implement changed laws that support crowdfunding for equity, potentially a year ahead of the lethargic U.S. equity crowdfunding law.
Crowdfunding has been changing the financial landscape of Italy ever since the Italian parliament voted to implement 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 – the “Decreto Crescita Bis” or the Italian “Growth Act 2.0” 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.
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
See also: Italy Leads The U.S. In Equity Crowdfunding. Forbes. 4/1/2013.