Equity crowdfunding is an innovative method of financing start-ups and SMEs, offering investors the opportunity to acquire shares in their capital stock. This type of investment, regulated in Italy by Consob, allows start-ups to raise capital directly from the public, bypassing traditional bank financing channels. Investors, on the other hand, can diversify their portfolio by entering into companies with high growth potential at an early stage of their development. Consob regulation ensures that there are various safeguards for investors, guaranteeing transparency and security in transactions.
It is important to remember that equity crowdfunding represents a generally riskier investment than other traditional financial instruments. Therefore, investors should approach this form of investment with awareness, being well aware of their rights and potential implications.
Basic Investor Rights
When investing via equity crowdfunding, investors are entitled to:
1. Property Rights
Investors in equity crowdfunding always have equity rights. When they buy shares in a company, they acquire the right to a share of the dividends distributed by that company. Furthermore, in the event of liquidation of the company, they are entitled to a proportional share of the remaining assets after all debts have been settled. These rights are fundamental and are part of the package of benefits and risks associated with equity crowdfunding investment.
2. Option Rights
In some cases, investors can take advantage of the right of first refusal on any new shares issued by the company. This means that in the event of new share issues, existing investors will have priority in the purchase of shares. This right depends on the specific conditions laid down in the offer and the articles of association of the issuing company. In general, the pre-emptive right can be provided to protect existing investors in the case of new share issues, but it is not a universal and automatic guarantee for all equity crowdfunding projects. Investors should carefully examine the terms of the offer to understand whether and how this right is applied.
3. Administrative Rights
In some cases, depending on the amount of the investment or the type of shares purchased, investors may attend and vote at company meetings, influencing important decisions such as the appointment of the board of directors and the approval of the budget. In some cases, they can also challenge resolutions. Again, investors must carefully analyse the details of the offer to understand whether and how this right is conferred
Further Rights in Equity Crowdfunding
In addition to basic rights, equity crowdfunding transactions may include additional specific protections:
1. Co-sale rights
Through co-sale agreements, such as 'drag along' and 'tag along' clauses, minority shareholders are protected in the event of a sale of the company by ensuring that they can sell on the same terms as the majority shareholders.
2. Right of Revocation
Investors may withdraw their investment if, between the time of joining the offer and the final closing, new facts or material errors in the information provided come to light.
3. Right of Reconsideration
Investors are entitled to a seven-day period to reconsider and revoke their membership order at no additional cost, even without providing a specific reason.
In conclusion, it is crucial that investors read the investment documents carefully to fully understand the terms, risks and associated rights. Relying on reliable and transparent partners, and operating only through platforms authorised by Consob and Bankitalia, provides greater protection. Transparency and regulation are key to avoiding fraud and ensuring that investments are managed ethically and legally. Only in this way can investors make informed choices and protect their financial interests.