New laws regarding the criteria that companies must meet in order to issuing shares through crowdfunding portals
The introduction of equity crowdfunding for retail investors in October 2012 made Italy the first nation in Europe to adopt a legal framework dedicated specifically to developing retail equity crowdfunding. Italy’s legislature provided an outline for the legal framework within Decreto Legislativo 179/2012 on October 18, 2012. In doing so, it called on CONSOB to write the supporting regulations and as a result on June 26, 2013 CONSOB adopted Regulation number 18592 (“Regulation on the collection of equity capital from innovative startups through online portals”). It consists of clear and concise provisions which facilitate financing for SMEs and provide basic investor protections.
The recent Decreto Legislativo n. 3 of 01/24/2015, converted into the Law n. 33 of 03/24/2015, as a request of the Italian financial community to boost crowdfunding, has expanded the criteria that companies must meet in order to issuing shares through crowdfunding portals. Indeed, Law n. 33/2015 extends the possibility of issuing shares through crowdfunding portals – within the same legal framework set for the startup companies as defined in the Decreto Legislativo 179/2012 – to “innovative small and medium enterprises”, hereinafter “innovative SMEs”, collective investment bodies and companies which invest prevalently in innovative start-ups and in innovative SMEs.
The definition of “innovative SMEs” is contained in article 4, section 1, of the Decreto Legge n. 3 of 01/24/2015, which says that SMEs, as defined by recommendation 2003/361/EC, must meet the following requirements:
The business is registered in Italy or in any other Member State of the European Union and has at least a branch or production plant in Italy;
Having the last financial statement or consolidated financial statement audited by a registered auditor;
The issuer must not have its shares listed on a regulated market or on a multilateral trading system;
It must not be entered on the special register for innovative startups;
Finally, it must meet at least two of the following requirements: (1) volume of expenditure in research and development equal to or more than 3 percent of the greater of either the total production costs or of the total production value of the innovative SME, (2) one-third or more of employees with a research doctorate degree or be research-focused graduates and (3) the issuer must hold some intellectual property rights like a trademark or patent.
The possibility of issuing shares through crowdfunding portals extended to “innovative SMEs”, collective investment bodies and companies which invest prevalently in innovative start-ups and in innovative SMEs is a big step ahead in the Italian legal framework on crowdfunding.