By amending Article 26 of Legislative Decree 179/2012, the so-called corrective measure 2017 (Decree Law 50/2017) has extended also to small and medium-sized enterprises (SMEs) incorporated in the form of limited liability companies (s.r.l.) the possibility, already implemented for SMEs incorporated in the form of joint-stock companies (“società per azioni” (s.p.a.)), to offer their capital to the public through crowdfunding, that is the raising of funds through online platforms.

Definition of SME

The SME concept is set out in EU Commission recommendation no. 2003/361/EC of 6 May 2003, implemented in Italy by decree of the Ministry of Economic Development of 18 April 2005.

Pursuant to the aforesaid recommendation, the category of SMEs is made up of:

  1. microenterprises which employ fewer than 10 persons and whose annual turnover (or annual balance sheet total) does not exceed EUR 2 million;
  2. small enterprises which employ fewer than 50 persons and whose annual turnover (or annual balance sheet total) does not exceed EUR 10 million;
  3. medium-sized enterprises which employ fewer than 250 persons and whose annual turnover does not exceed EUR 50 million (or whose annual balance sheet total does not exceed EUR 43 million).

Regulatory evolution

Originally, crowdfunding was intended for «innovative start-ups» (Article 25 of Decree Law 179/2012). The possibility to resort to crowdfunding was then extended to «innovative SMEs» (Article 4 of Decree Law 3/2015) and, finally, to all SMEs, irrespective of the originality of their corporate object (Article 1, paragraph 70, of Law 232/2016, i.e. 2017 Budget Law).

Nonetheless, despite the foregoing provisions, because of the prohibition to offer quotas of limited liability companies to the public pursuant to Article 2468 of the Italian Civil Code, innovative start ups and SMEs incorporated in the form of limited liability companies were not allowed to resort to crowdfunding.

In order to give concrete effect to the possibility for innovative start-ups incorporated as limited liability companies to have recourse to crowdfunding, Article 26, paragraph 5, of Legislative Decree 179/2012 has provided for an express derogation from Article 2468, paragraph 1, of the Italian Civil Code, laying down that public offerings of financial products can be opened for quotaholdings in start-ups incorporated in the form of limited liability companies, even through fundraising platforms. On the contrary, the textual amendment introduced by 2017 Balance Law – which, has stated above, extended the resort to crowdfunding also to SMEs tout court – omitted to specify the derogation from the principle laid down in the mentioned Article 2468, paragraph 1, of the Italian Civil Code.

Hence, Article 57, paragraph 1 of Decree Law 50/2017, converted, with amendments, by Law 96/2017, has recently corrected such discrepancy by replacing the words “innovative start-up” with the word “SME” in paragraph 5 of Article 26 of Legislative Decree 179/2012 whose amended text is the following: “In derogation from the provisions of Article 2468, first paragraph, of the Italian Civil Code, public offerings of financial products can be opened for quotaholdings of SMEs incorporated in the form of limited liability companies, even through fundraising platforms under Article 30 of this Decree, within the limits provided for by special laws”.

The legislative innovation described above seems to go in the opposite direction to the one followed with the reform of corporate law of 2003 that aimed for overcoming the flattening of limited liability companies into the model represented by joint-stock companies by giving the former a “personalistic” feature and attributing greater importance to the quotaholders’ role in the carrying out of the company’s activities, thus making limited liability companies different from joint-stock companies, whose nature was mainly focused on “capital”, with a limited role of shareholders in the management of the company.

Other innovations introduced by the 2017 measure.

So, with the corrective measure of 2017, an SME incorporated in the form of limited liability company gets closer again to its big sister, the joint-stock company, and this not only with reference to the removal of the prohibition to offer to the public quotas of limited liability companies having the size requirements of SMEs (with the inconsistency that big-sized limited liability companies cannot offer their capital shares on the market). The measure has now introduced for SMEs incorporated in the form of limited liability companies other two important innovations, already contemplated for start-ups incorporated in the form of limited liability companies.

  1. Classes of quotas – Article 26, paragraph 2 of Legislative Decree 179/2012

Due to the amendment to paragraph 2 of Article 26 of Legislative Decree 179/2012 introduced by Decree Law 50/2017, the by-laws of SMEs incorporated in the form of limited liability companies can now provide for classes of quotas with different rights and, within the limits imposed by the law, can freely set forth the content of said rights, even derogating from the provisions of Article 2468, paragraphs 2 and 3, of the Italian Civil Code.

So, it is possible to provide for quotaholdings that:

  1. grant corporate rights not proportional to the holding giving rise to said rights;
  2. grant rights whose content can be freely determined, within the limits of the law;
  3. grant the holders of said quotas (not necessarily to the individual quotaholder) “particular rights” concerning the administration of the company or the distribution of profits.

Transaction on treasury shares – Article 26, paragraph 6 of Legislative Decree 179/2012

Due to the amendment to paragraph 6 of Article 26 of Legislative Decree 179/2012 introduced by Decree Law 50/2017, the prohibition to carry out transactions on treasury shares, set out in Article 2474 of the Italian Civil Code, does not apply to SMEs incorporated in the form of limited liability companies if the transaction is carried out to implement incentive plans for the allocation of quotas to employees, collaborators or members of the administrative body, workers and providers of services, including professional services.