The New Italian Equity Crowdfunding Laws: where are the limits?

italy-flagIt’s been three weeks since the publication of the Consultation Document on the Regulation on Crowdfunding by the Italian Financial Authority CONSOB. Three weeks full of discussions, praise and criticism of the regulation. I have had the opportunity to discuss it with many people from various sectors and I wanted to share some points of view on a regulation that is innovative, challenging and the object of some criticism.

Notably I have spoken to a number of lawyers who are, perhaps understandably, taking a particular interest in the regulation. Umberto Piattelli is a partner of the international law firm Osborne Clarke and he revealed that  many of their clients present the same problem: they have innovative ideas but they struggle to get any funding from banks or investors – a problem not just limited to Italy! “Crowdfunding can become an interesting option for companies that require only modest capital”, Umberto says. Furthermore, crowdfunding, according to Umberto, has great flexibility and people can be innovative in the way they use it if they open their minds. For example, for Umberto, it also has potential in the field of public administration: crowdfunding could be used by public bodies, for social activities with mutual purposes, solidarity and study or research funding. “After all, who is it to stop a public body from creating their own portal?

In Italy we are among the first in the world to have adopted legislation,” Umberto says, “my colleagues abroad are working together with clients interested in developing crowdfunding platforms, but in a different way. The UK and Germany, for example, haven’t got specific regulation, Spain and Portugal are just at the beginning.” Having begun to receive input from people interested in raising capital online, the law firm is looking at the Consob regulation with great interest. However the regulations are not entirely positive according to them and it could be argued that they hinder crowdfunding rather than facilitate it. Let’s see why.

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