The rights of shares in LLCs

Francesca Bello
June 18, 2025
Doing Business
how to raise capital, webinar italian

Prepare a equity crowdfunding capital raising also means to prepare the rights to be granted to the investor, the types of shares to be sold, the contractual terms of the investment, the relationship between the company and shareholders. That is why in order to raise crowdfunding capital strategically and safely, it is important to have the support of a lawyer experienced not only in corporate law, but also in innovation and startup law.

It is crucial for an entrepreneur who wants to raise capital to know the viewpoint of investors to know how his offer is perceived and what the market wants, so as to structure a proposal that meets investors' needs.

Preparation steps include:

Approval of the possibility of equity crowdfunding and related clauses in the company's bylaws

opening of the capital increase.

L'capital increase is an act passed by a corporation that provides for third parties to inject new resources into the corporation. This may result in a revision of shareholders' weights and rights.

Making a capital increase with the legal form of LLC makes no sense for two reasons:

- would force to foreclose the entire market of corporations that would want to invest in the company (since only individuals can invest in LLCs);

- the savings given by the srls occurs in the incorporation of the company, but in the management the charges are the same, so the cost of the capital increase is the same as an srl. In doing the capital increase then I can change the legal form from an srl to an LLC and it is particularly useful to be able to make the statutory decisions necessary to do equity crowdfundin, which are not provided by the srls.

What kinds of rights can be offered to investors and which ones work best?

Being a partner in a corporation gives 2 basic rights under the Civil Code:

Right to obtain dividends (property right)

Right to vote at the meeting (administrative law)

These rights can be expanded or reduced in the equity crowdfunding offering.

Voting rights normally willingly sacrificed in equity crowdfunding, because the founder has an interest in maintaining full control of the company, offering investors other rights in return, for example:

liquidation preference (preference over liquidation), so the profits available at the time of any liquidation go first to equity investors with this right and then to all other shareholders;
enhanced dividends (recognition of a higher percentage than the actual share)
right of co-sale (tag along), i.e., the right to sell its share to a prospective buyer on the same terms proposed to the majority shareholders.

The latter right also exists in reverse to protect the company: it is the right of drag (drag along), a clause whereby the company's majority shareholders can also sell the shares of minority shareholders, on the same economic terms as their own, without seeking consent.

Minority shareholders must be attentive primarily to a statutory provision: the rights of inspection and information. These members have virtually no rights apart from dividends and access to minimal meeting information such as financial statements. While it is right to avoid giving too much information to minority shareholders, to avoid excessive demands and the risk of disclosure, the importance of these shareholders should be recognized and sufficient information rights to access macro information relevant to the fate of the company should be guaranteed.

Another useful element to include in the statute is the segregation clause: provides for putting members with a smaller stake in an SPV at some point in the future (e.g., once a capital raising total is reached). It does not apply to existing members but only to future members after putting it in the bylaws. It serves to have all the smaller members in an SPV own the shares in the base company.

Statutory clauses on equity crowdfunding offerings are also solutions to avoid having an overcrowded and complicated cap table for companies: it becomes easier to sell to possible third-party buyers and also to manage day-to-day relationships with shareholders.

You can also use the shareholders' agreement to establish these clauses and rights, but it applies only to some members and has a maximum duration of 5 years.

All this preliminary work is crucial to choosing a corporate structure that allows the business plan to be carried forward smoothly after the capital raising campaign.

We discussed this in our webinar with attorney Giuseppe Pipicella.