The following guest post is by David Drake, founder and chairman of LDJ Capital, a New York City private-equity firm, and of The Soho Loft Capital Creation Events series, a global events and media company.
Last March 29, Italy’s Commissione Nazionale per le Società e la Borsa (CONSOB), the equivalent of the Securities and Exchange Commission in the US, submitted requests for public commenting on the equity crowdfunding rules currently considered. It seems that Italy will surpass the JOBS Act in the implementation of the first equity crowdfunding law in the world.
One of the leading business angels in Milan, Alberto Giusti, commented that this crowdfund equity proposal has some limitations. “The definitions are not fully settled but right now only ‘innovative startups’ can be considered so brick and mortar businesses do not apply,” says Giusti. He adds that firms that control the Internet portals conducting crowdfunding investments have to be a financial entity SpA Societa per Azioni – roughly the US equivalent of an Incorporation) or a bank registered and monitored by CONSOB as these offer the highest corporate control structures. Furthermore, a financial entity registered by CONSOB must have first invested at least 5% in an offering for it to qualify to be crowd funded for equity.
Because of the delay in making equity crowdfunding a functional law in the U.S. — mainly orchestrated by the crowdfunding opposition and not by the SEC — Italy may circumvent our delay and become the first country in the world to implement changed laws that support crowdfunding for equity, potentially a year ahead of the US.