Equity Crowdfunding Italian Law

Alessandro M. LERRO

FINANCING START-‐UPs EQUITY CROWDFUNDING

Roma, November 15, 2013 LUISS – Scuola di Management – MBA ALUMNI

EQUITY CROWDFUNDING ITALIAN LAW

Avv. Alessandro M. Lerro April 4, 2014 Palo Alto

LAW: LAW n. 221, Dec. 17, 2012 “2.0 Growth Decree” REGULATION: CONSOB Reg. n. 18592 June 26, 2013

©2013 A.M. Lerro

LEGAL FRAMEWORK:

CONSOB has the supervision and is enWtled to impose penalWes

PlaYorms ought to be registered with CONSOB

PlaYoms ought to meet reputaWon and competence requirements

Investment is subject to MIFID and operated through BROKER-‐DEALERS

©2013 A.M. Lerro

TARGET CO.: ONLY INNOVATIVE START UPs ARE ALLOWED TO RAISE EQUITY FROM THE CROWD

(…for now)

©2013 A.M. Lerro

You can raise

€ 5.000.000,00 per company, per year

©2013 A.M. Lerro

CROWDFUNDING PLATFORMS: ONLINE PLATFORMS, WHOSE EXCLUSIVE PURPOSE IS TO HELP COMPANIES TO RAISE EQUITY FROM THE CROWD (art.1.5.9 TUF)

©2013 A.M. Lerro

SMALL INVESTMENTS • Directly managed • MIFID exempted

BIG INVESTMENTS • Partner with a BROKER-‐DEALER • Investment profile to match with proclivity to risk investment

©2013 A.M. Lerro

SMALL INVESTMENTS:

INDIVIDUAL: < 500€ per investment < 1000€ per year

COMPANY: < 5.000€ per investment < 10.000€ per year

©2013 A.M. Lerro

BROKER-‐DEALERS: BANKS and INVESTMENT Co.s Take in charge the PAYMENT, the execuWon of the investment

©2013 A.M. Lerro

MANAGE A CROWDFUNDING

PLATFORM THEMSELEVES

PARTNER WITH A CROWDFUNDING

PLATFORM

MIFID = European Union DirecWve, Markets in Financial Instruments and investment services

IDENTIFICATION OF THE CLIENT

ANTI-‐LAUNDERING RULES

INVESTMENT PROFILE TO MATCH WITH PROCLIVITY

TO RISK INVESTMENTS

MIFID PROCEDURE:

©2013 A.M. Lerro

©2013 A.M. Lerro

ADVISING:

Broker-‐Dealers may advise and give suggesWons, within their general rules. PlaYorms may not provide recommendaWons suitable to influence pledges.

J

BROKER-‐DEALERS

L

PLATFORMS

INVESTORS: ITALIAN LAW PROVIDES A ROBUST LEGAL FRAMEWORK OFFERING PROTECTION TO INVESTORS

©2013 A.M. Lerro

There is

NO PERSONAL INVESTMENT LIMIT

MIFID regulates any NON SMALL investment ©2013 A.M. Lerro

INVESTORS EDUCATION:

Companies must invest on educaWon and offer it to potenWal investors. It helps with the asymmetric informaWon problem.

©2013 A.M. Lerro

INVESTORS confirm •  that they understood the risks of equity investment

INVESTORS confirm •  that their personal estate will be not compromised

SELF

ATTESTATION

It is NOT an Entrepreneur’s onus; NO parWcular formality required; NO third parWes databases

©2013 A.M. Lerro

SET OF WITHDRAWAL RIGHTS:

WHO WHEN WHY RULE

Retail Investors Bank FoundaWons Registered Incubators

7 days from the investment

No reason or explanaWon: they just changed their mind

§13.5 Reg.

Consumers* 14 days from the investment

No reason or explanaWon: they just changed their mind

Consumer Code

Retail Investors Bank FoundaWons Registered Incubators

7 days from the news, but before the campaign closed

Material mistake or something new happened, suitable to influence the investment decision

§25.2 Reg.

* The only case where plaYorm are allowed to withold costs

©2013 A.M. Lerro

Any Shareholders Agreement must be noWfied to Investors

If the Founding Shareholders sell the business or anyhow wave control

INFORMATION RIGHT

TAG ALONG or WITHDRAWAL

RIGHT*

SHAREHOLDERS AGREEMENTS:

* Only for RETAIL INVESTOR As long as the Company enjoys InnovaWve Start Up status

©2013 A.M. Lerro

TAKE AWAY:

- Free sale of the shares (incentives to keep them)

- No investment limit per person

- 5M€ max per year - Any nationality (platform, target, investors, …)

- Investment concluded through Broker-Dealers

- STRONG consumers’ protection

- Registered Platforms

- 5% equity: Professional Investors

©20

13 A

.M. L

erro

WWW.LERRO.IT ROME

Alessandro M. Lerro alessandrolerro [email protected] Available on:

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