Crowdfunding: Not only equity but also debt instruments. Proposals for amendment to the Consob Regulation under consultation until 20 July 2019

19 July 2019

The 2019 budget law introduced certain amendments to the specific Italian law on crowdfunding (Crowdfunding Regulation no. 18592/2013), in order to extend the provisions on crowdfunding, as well as bonds and debt instruments issued by small-medium enterprises (“SME”).

The subscription will be reserved to professional investors only, and to particular categories of investors to be identified by Consob (the Italian investment services regulator) and will be performed on a section of the promoters’ official website other than the section for capital raising.

Consob has launched a consultation process for the relevant amendments to the Crowdfunding Regulation, which mainly relate to the identification of further investors that do not qualify as professionals, but operate under a degree of competence, experience and capacity to cope with potential losses.

Within the possible options, Consob proposes that the legitimacy to subscribe to the mentioned bonds is extended to other categories of investors, such as: bank foundations, incubators of innovative start-up and investors in support of SME. These which are not subject to rules on protection of investors, or controls on the level of experience and knowledge necessary for the investment and have always participated in the crowdfunding offers. So it is easy to assume that they have the capacity to support the development of bond issuances offered through on-line portals.

A further possible option identified by Consob is to allow the subscription of bonds to those having a financial portfolio for a value in excess of Euro 250,000 and who undertake to invest at least Euro 100,000 in offers of such type.  With the aim of enlarging the categories of investors allowed to subscribe bonds through crowdfunding on-line websites.

Another option is to extend the subscription of bonds through crowdfunding portals to retail investors, provided that the subscription occurs within the service of portfolio management (based on a mandate between the retail client and the manager, who must evaluate the adequacy of the investment).

Consob also called for a public consultation on further changes to the legislation, in order to facilitate the disinvestment for those who subscribed to offers through on-line portals, given that investors may typically find it difficult to disinvest.

Finally, the public consultation relates also to the identification of investors entitled to offer on crowdfunding portals. This  follows a clarification request addressed to Consob by an operator of a crowdfunding portal. Consob expressed the view that offerors on crowdfunding portals may not include companies having their legal seat outside the EU.
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