Crowd-funding means, in general, a collaborative process through which people lend their own money with the aim of supporting and financing any kind of entrepreneurial project or initiative. A group of people involved in a crowd-funding project usually meets and cooperates via web portal, which makes the encounter of offer and demand much easier.
When through these web portals, and by reason of their economic contribution, people acquire a real equity stake in a company, we are instead speaking of equity crowd-funding. In such a case, the “reward” for the financers is given by the set of (pecuniary and administrative) rights conferred by virtue of their shareholding. As for companies, the main advantage given by the equity crowd-fundingsystem is the possibility to seek for risk capital on the Internet. The success of this innovative way of financing is likely to depend mainly on the quality and attractiveness of the business plan, so that it may either be a good solution for SMEs which have failed to obtain credit from the banking system and also a valid alternative to the venture capital market, which is poor in Italy. Italy was the first country in Europe, and among the few countries across the world, to regulate equity crowd-funding. However, while the 2013 CONSOB Regulation had already foreseen the possibility to operate E.C. web portals, provided that CONSOB (which is a supervisory authority) granted the necessary authorization, at that time this form of financing was only available for the so-called “innovative start-ups companies”. Nowadays, thanks to the Legislative Decree 50/2017 and to the new 2018 CONSOB Regulation (which entered into force in January 2018) it is also possible for equity stakes in Limited Liability Companies to be offered to the public through equity crowd-funding web portals, by way of derogation from article 2468 of the Italian Civil Code. In more detail, under the current regulation, the following types of companies are allowed to benefit of the equity crowd-funding system:
1) “Micro enterprises” less than 10 employees, and a turnover (or a balance sheet total) of less than 2 million euros;
2) Small enterprises, less than 50 employees, and a turnover (or a balance sheet total) of less than 10 million euros;
3) Medium enterprises, less than 50 employees, and a turnover (or a balance sheet total) of less than 43 million euros.
Administrators of the equity crowd-funding portals shall fulfill the subjective requisites of integrity, honorableness and professionalism, and be listed in an ad-hoc register, managed and supervised by CONSOB. Moreover, E.C. web portals shall clearly display to the public the offered services, the guarantees and the transparency rules as provided by the relevant national regulations.
Last but not least, the admins of E.C. portals are also required to join a compensation scheme to protect their investors. Alternatively, these managers may also stipulate precautionary insurance contracts against any risk that could arise under professional responsibility, which must cover at least the sum of 20.000 euros for each claim and the sum of one million euros for the overall claims in a year.
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