On October 21st, Consob and the Bank of Italy released a joint communication regarding the new European crowdfunding regulation.
Read more on the subject and find the latest financial news with the Born2Invest mobile app.
The joint communication from Consob and the Bank of Italy
In the communication, Consob and Bankitalia noted that, as of November 11th, 2023, only crowdfunding service providers for companies that have obtained authorization under the EU Regulation may continue to operate in Italy. And, further, although they have been designated by Parliament as the competent authorities for the authorization and supervision of crowdfunding service providers, they will only be able to receive formal applications for authorization following the adoption of the implementing legislative decree.
The two authorities note how, at the national level, the Regulations introduce for the first time a comprehensive framework for lending crowdfunding for businesses, while replacing the national regulatory framework applicable to equity crowdfunding portal operators. And they point out that the new Regulation presents additional complexities for platforms seeking authorization, requiring operators to comply with prudential requirements and have appropriate organizational arrangements to ensure adequate risk management and business continuity, as well as investor protection rules inspired by those of the MiFID2 Directive.
Readiness for consultations
Pending the completion of the process of regulatory compliance, Consob and the Bank of Italy, moreover, make themselves available to facilitate an orderly start-up of the new regime, through informal interlocutions to guide operators interested in the future submission of applications for authorization, also providing clarifications or preliminary considerations on the information and documentary elements to be attached to the applications.
To this end, they have made available a form for scheduling meetings, to be sent to both Consob and the Bank of Italy.
The new European regulation certainly opens up new opportunities for the industry, but it also presents elements of increased complexity. We summarize what we see as the main points.
Opportunities for crowdfunding platforms
1.Possibility for platforms to raise in all EU countries (with some constraints: at least English language, reporting to authorities, marketing activities subject to each country’s rules)
2.Possibility of “asset management”: platforms will be able to offer investors allocation of funds to different projects or financial instruments based on determining risk profiles.
3.Ability to place other financial instruments besides equity, p2p loans, and minibonds. For example, convertible loans, participatory financial instruments, etc.
More complexities for platforms and bidders
- More complex licensing process (especially for lending platforms: Directors must have a high standard of professionalism ensured by past experience in finance and corporate affairs. Adequate organizational structure and organizational chart, indicating who is in charge of governing the different processes (e.g: Assessment Technical Analysis of Projects, Conflict of Interest Management Policy, Fraud Prevention Policy, Internal Compliance Officer, Complaints Policy, Whistleblowing Policy, Creditworthiness Analysis, Appropriateness Questionnaire Officer). The analysis of the risk related to each offering and cross-reference with the investor’s risk profile
stringent policy on conflict of interest
anti-money laundering: platforms will have to subject both bidders and investors to adequate verification. Platforms subject to supervision by Consob and Bank of Italy.
- For businesses
Funding limit at 5 million
Prepare a prospectus (KIIS: Key Investment Information Sheet).
3. Increased investor protection
Sophisticated and Non-Sophisticated (less than 60k income or portfolio less than 100k) can invest max 5% assets or 1000 or take a test, through software provided by the platform.
Appropriateness questionnaire (Mifid): equity platforms have been doing this for some time, while lending platforms need to introduce it
Communication activities allowed according to each country’s rules.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in Crowdfunding buzz, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
Why the Global Fintech Sector Is Seeing a Decline in Activity
The volume of fintech deals in 2023 fell about 70 percent from the 2021 peak, making it more similar to...
The End of Cannabis in Thailand? The Ministry of Health Introduces a Ban
This legislative change represents a decisive turn in the drug policy of a country that until recently was a leader...
Solana and Meme Coins Are Hugely Positive – Bitcoin Is Driving the Market
As the number one Solana meme coin, BONK is currently up a good 80 percent weekly. You can turn the...
Grifols Rebounds 20% on the Stock Market Due to Its Cash Flow Data and the Sale of Shanghai Raas
Grifols' guidance for 2024 estimates recording an adjusted EBITDA of more than 1.8 billion euros, as well as a free...
When to Buy, When to Sell?Look at the Dow Jones Dividend Yield
The next time the Dow Jones Dividend Yield increased to above 3% was during the March 2020 Flash Crash, where...
Biotech6 days ago
Rovi Will Double Production to Sell to Third Parties After the Drop in Sales Post Covid-19
Fintech2 weeks ago
Bold Will Have a Debit Card and Will Start Pilot Testing of the Account in March
Fintech2 weeks ago
Solaris Bank Ends Months of Trepidation with ADAC Deal
Impact Investing5 days ago
Stellantis Partners with Ayvens to Supply 500,000 Electric Cars