Region

Jurisdiction

Regulator

2013-07-26

Communications - Communication by Bank of Italy and CONSOB on the regulatory framework for Alternative Investment Fund Managers

The Bank of Italy and CONSOB issued joint guidance to clarify the transitional regulatory framework for Alternative Investment Fund Managers (AIFMs) following the July 22, 2013 deadline for the transposition of the AIFMD into Italian law. The document establishes that existing Italian management companies may continue operations under national rules until new legislation is enacted, while EU-based managers must utilize notification procedures for cross-border activities. Additionally, it outlines immediate applicability rules for European Venture Capital and Social Entrepreneurship funds, detailing registration and notification requirements for both domestic and foreign managers.

Italy

Banca d'Italia

IMPLEMENTATION OF THE DIRECTIVE ON ALTERNATIVE INVESTMENT FUND MANAGERS 1.1 PRELIMINARY REMARKS Directive 2011/61/EU ("AIFMD") on alternative investment fund managers defines harmonized rules applicable to managers of all investment funds other than those covered by Directive 2009/65/EC. It provides for the application to such managers of conduct rules, information transparency requirements, and organizational and risk control requirements analogous to those provided for for the management companies of harmonized common investment funds. Under the new rules, European managers authorized under the AIFMD may freely market in the entire European Union, to professional investors, alternative investment funds managed by them; they may also manage alternative funds reserved for professional investors in other countries of the European Union on a cross-border basis or through the establishment of branches. The deadline for transposing the Directive into national legal systems expired on July 22, 2013. On the same date, Delegated Regulation (EU) No 231/2013 also entered into force, which contains implementing provisions of the AIFMD regarding derogations, general conditions of exercise, depositaries, leverage, transparency, and supervision, the content of which is substantially consistent with the currently effective national regulatory legislation. Given the direct effect, in the national legal system, of the EU Regulation as well as those provisions of the Directive that must be considered, according to constant case law, self-executing by virtue of their positive, clear, precise, and detailed content (including those concerning the transitional regime and the cross-border operation of managers), the Bank of Italy and CONSOB, as competent authorities, provide – according to an approach shared by the Ministry of Economy and Finance – some clarifications and indications aimed at clarifying the rules applicable from July 22, 2013, and until the entry into force of the national provisions transposing the AIFMD. The indications contained in this document are consistent with the provisions contained in the draft legislative decree placed under consultation by the Ministry of Economy and Finance. 1.2 ITALIAN MANAGERS 1.2.1. SGRs that, as of July 22, 2013, manage and market to professional investors or retail investors OICRs falling within the scope of application of the AIFMD (hereinafter, "AIFs"), may continue to manage and market such AIFs operating – until the entry into force of the legislative and regulatory provisions transposing the AIFMD itself – based on the currently effective national regulatory framework. 1.2.2. Until the date of entry into force of the national legislative and regulatory provisions transposing the AIFMD, the authorization of new Italian managers and the establishment and marketing of new Italian AIFs continue to be regulated by the currently effective national provisions. 1.2.3. Until the date of entry into force of the national legislative and regulatory provisions transposing the AIFMD, SGRs cannot manage or market AIFs on a cross-border basis in other EU Member States through the notification procedure provided for in Articles 32 and 33 of the AIFMD. 1.3 EU MANAGERS 1.3.1. OICRs falling within the scope of application of the AIFMD established in an EU Member State other than Italy (hereinafter, "EU AIFs") and managed by a subject established in an EU Member State other than Italy (hereinafter, "EU AIFMs"), whose offer in Italy was authorized before July 22, 2013, may continue to be marketed in Italy to professional investors. 1.3.2. By July 22, 2014, the EU AIFMs referred to in paragraph 1.3.1 must adopt all necessary measures to comply with the provisions transposing the AIFMD and, through the competent authority of the home Member State, carry out the notification prescribed by Article 32 of the AIFMD, once authorization has been obtained under the same Directive. In the absence thereof, marketing is suspended. 1.3.3. From July 22, 2013, EU AIFMs established in a Member State where the AIFMD has been transposed into the national regulatory framework and who intend to market in Italy, to professional investors, the AIFs managed by them, apply the notification procedure provided for in Article 32 of the AIFMD. The notification letter is sent, through the competent authority of the home Member State of the EU AIFM, to CONSOB, at the email address designated for this purpose and communicated to the competent authorities of other Member States according to the operational guidelines issued by ESMA. A copy of the notification is promptly transmitted to the Bank of Italy. 1.3.4. From July 22, 2013, EU AIFMs established in a Member State where the AIFMD has been transposed into the national regulatory framework who intend to manage an Italian AIF, on a free provision of services basis or through the establishment of a branch, apply the communication procedure provided for in Article 33 of the AIFMD. The communication is sent, through the competent authority of the home Member State of the EU AIFM, to the Bank of Italy, which proceeds with the consequent obligations and the registration of EU AIFMs in a special section of the register referred to in Article 35 of the TUF. A copy of the communication is promptly transmitted to CONSOB. The provisions of Article 41-bis of the TUF and the related implementing provisions contained in the Bank of Italy Regulation on the collective management of savings of May 8, 2012 apply, insofar as compatible. 1.3.5. The authorization procedure provided for in Article 42, paragraph 5, of the TUF, as defined by the related implementing regulatory discipline, continues to apply to applications for marketing in Italy of AIFs managed by EU AIFMs established in a Member State where the

3 - AIFMD has not yet been transposed into the national regulatory framework. The provisions of point 1.3.2 apply to the EU AIFMs referred to in this paragraph. 1.3.6. Authorization proceedings, pending as of July 22, 2013, initiated under Article 42, paragraph 5, of the TUF, and the related implementing provisions, relating to EU AIFs for which the notification procedure provided by Directive 2011/61/EU applies, are considered terminated on that date, unless the applicant EU AIFM, within the subsequent 60 days, attests, with a substitute declaration of notariness prepared pursuant to D.P.R. No. 445/2000 and communicated to the Bank of Italy and CONSOB, that it is established in a Member State where the AIFMD has not yet been transposed into the national regulatory framework. 1.3.7. The authorization procedure provided for in Article 42, paragraph 5, of the TUF, as defined by the related implementing regulatory discipline, continues to apply to applications for marketing in Italy to retail investors of AIFs managed by EU AIFMs established in a Member State where the AIFMD has been transposed into the national regulatory framework. The issuance of authorization presupposes that the EU AIFMs have completed, for each AIF to be marketed, the notification procedure provided for in Article 32 of the AIFMD. 1.4 NON-EU MANAGERS AND AIFs Until the date of entry into force of the national legislative and regulatory provisions transposing the AIFMD, the authorization procedure provided for in Article 42, paragraph 5, of the TUF, as defined by the related implementing regulatory discipline, continues to apply to applications for marketing in Italy of AIFs managed by a subject established in a third country ("Non-EU AIFM") and of Non-EU AIFs managed by EU AIFMs.

APPLICATION OF EU REGULATIONS RELATING TO VENTURE CAPITAL FUNDS AND FOR SOCIAL ENTREPRENEURSHIP Regulations (EU) Nos. 345/2013 and 346/2013, which entered into force on July 22, 2013, provide for common rules applicable to managers of European venture capital funds (EUVECA) and European funds for social entrepreneurship (EUSEF) and allow their free marketing, with a specific designation, throughout the European Union. Pending the amendment of the TUF, CONSOB and the Bank of Italy consider – according to an approach shared by the Ministry of Economy and Finance – appropriate to define the following criteria in order to allow the timely application of the Regulations. They are consistent with the provisions contained in the draft legislative decree placed under consultation by the Ministry of Economy and Finance. 2.1. From July 22, 2013, SGRs that manage OICRs that meet the requirements provided for in EU Regulations Nos. 345 and 346 of 2013, must communicate this to the Bank of Italy and CONSOB, attesting to the existence of the same requirements and providing the list of Member States in which each fund will be marketed; they are deemed registered and may market such funds under the aforementioned Regulations. 2.2. From July 22, 2013, Italian subjects other than SGRs who carry out an activity qualifying as the collective management of OICRs that meet the requirements provided for in EU Regulations Nos. 345 and 346 of 2013, may communicate to the Bank of Italy and CONSOB their intention to register under the aforementioned EU Regulations. Marketing under the aforementioned Regulations is subject to compliance with the requirements provided therein. Such subjects, once registered, may market their respective funds under the aforementioned Regulations. 2.3. The Bank of Italy, having heard CONSOB, registers and cancels Italian subjects that meet the requirements provided for in EU Regulations Nos. 345 and 346 of 2013 and who intend to constitute OICRs under the same Regulations; the registration is carried out in a separate section of the register provided for in Article 35 of the TUF. 2.4. CONSOB carries out notifications to the competent authorities of Member States in which Italian subjects registered under EU Regulations Nos. 345 and 346 of 2013 intend to market their respective OICRs in conformity with the discipline of the Regulations themselves. 2.5. European fund managers that meet the requirements provided for in EU Regulations Nos. 345 and 346 of 2013 and intend to market their funds in Italy carry out, through the competent authority of the home Member State, the notification prescribed by Article 16 of Regulation (EU) No. 345/2013 and Article 17 of Regulation (EU) No. 346/2013, once registration has been obtained under the aforementioned Regulations. CONSOB is the competent authority to receive such notification. Once the notification is received, CONSOB promptly transmits it to the Bank of Italy.