Italian interim rules for the passporting of foreign AIF and AIFM
Studio Legale Crocenzi e Associati
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Italian Regulatory Update Issue 2013 02
Date:July 29, 2013
Re: Non-implementation of the Alternative Investment Funds Managers Directive (“AIFMD”) in Italy by July 22, 2013 – Italian interim rules for the passporting of foreign AIF (as defined below) and AIFM (as defined below)
Although the relevant governmental decrees were already drafted in mid-July 2013, Italy wasn’t successful in implementing the AIFMD before July 22, 2013 because the Parliament didn’t approve in due course the Act that should have granted to the Government the power to implement the AIFMD and to delegate the Bank of Italy and CONSOB for the second level rules.
However, to the extent the AIFMD is a self-executing Directive for its level of detail, Italy, since July 22, 2013, has to accommodate in any case the passporting of EU Alternative Investment Funds (“AIF”) and Alternative Investment Funds Managers (“AIFM”) through the regulator-to-regulator notification procedure set out under the AIFMD, irrespective of the fact that the Republic failed to implement the AIFMD through the usual lawmaking procedures.
In this context, and in order to avoid disruptions and a breaches of the EC principles of free circulation and establishment, the Bank of Italy and CONSOB have issued on July 26, 2013 a joint Notice (the “AIFMD Notice”) with some preliminary information and guidelines for the passporting of foreign AIF and AIFM.
It should be noted that this type of procedure is similar to the one adopted in July 2011 with respect to the new passporting procedure set out by Directive 2006/65/EC (“UCITS IV”): also in that circumstance, Italy didn’t implement UCITS IV in due course and therefore CONSOB issued immediately after the deadline for the transposition of that Directive a Notice allowing foreign funds to benefit of the new regulator-to-regulator procedure (see our Italian Regulatory Update of July 6, 2011).
2 The Italian interim rules for the passporting of foreign AIFM and AIF
The AIFMD Notice addresses, inter alia, (i) the Italian AIFM; (ii) the non-Italian EU AIFM and (iii) the non-EU AIFM.
It should be considered that the AIFMD Notices focuses on the fund manager rather than on the product: this is due to the scope of the AIFMD, which covers the “alternative manager” and not the “alternative investment fund” per se, where the latter benefits of the free circulation only to the extent the manager complies with the AIFMD.
2.1 Italian AIFM
The Italian AIFM are called “SGR”, acronym for “Società di Gestione del Risparmio” (or Savings Management Companies), which denotes the Italian entities authorized to set up and manage collective investment schemes, including AIF.
The AIFMD Notice provides that until the full implementation of the AIFMD in Italy, the SGRs that are covered by the scope of the AIFMD (i.e., those active in the alternative management business) will manage and market their AIF in accordance with the current Italian laws and regulations (i.e., those preceding the transposition of the AIFMD in Italy, hereinafter, the “Pre-AIFMD Rules”).
Until such full implementation, the authorization of new SGRs managing AIF and the organization and marketing of Italian AIF shall be subject to the Pre-AIFMD Rules.
Finally, it should be noted that the delay in transposing the AIMD shall be a competition disadvantage for the SGRs, which shall not be able to apply for a passport to market their AIF to professional investors nor to offer their alternative management services out of Italy.
2.2 Non-Italian EU AIFM
EU AIF covered by the scope of the AIFMD which have been authorized for marketing in Italy before July 22, 2013 : the relevant AIFM can continue to market these AIF to professional investors in Italy. The same AIFM will have to comply with all the requirements for the implementation of the AIFMD and carry out the notification procedure set out by article 32 of the AIFMD (the “AIFMD Passport”) before July 22, 2014; failure to comply with said requirements will involve the suspension of the marketing of such EU AIF authorized before July 22, 2013.
Marketing of AIF to Italian professional investors by EU AIFM of a Member State that has already implemented the AIFMD: from July 22, 2013, these AIFM shall be entitled to market their AIF to professional investors in Italy through the AIMD Passport. The relevant notification shall be sent by the competent regulator of the AIFM home Member State to CONSOB, cc to the Bank of Italy. Should the AIFM of a Member State that has already implemented the AIFMD intend to market the AIF to Italian retail investors, the Pre-AIFMD Rules on the authorization of non-UCITS funds (article 42.5 of Legislative Decree no 58 of February 24, 1998 – hereinafter, the “TUF”) shall be applicable.
Management of an Italian AIF by a AIFM of a Member State that has already implemented the AIFMD: from July 22, 2013, these AIFM shall be capable of managing Italian AIF through a branch or the freedom to provide services, by means of a communication from the home Member State pursuant to article 33 of the AIFMD, to be transmitted to the Bank of Italy, cc to CONSOB. According to the general principles on cross border activity, a branch of a EU AIFM will have to carry out its business in accordance with the Italian rules.
Marketing of AIF to Italian investors (professional and retail) by EU AIFM of a Member State which has NOT implemented the AIFMD: the Pre-AIFMD Rules on the authorization of non-UCITS funds (article 42.5 of the TUF) shall be applicable. The relevant AIFM will have to comply with all the requirements for the implementation of the AIFMD and carry out the notification procedure set out by article 32 of the AIFMD (the “AIFMD Passport”) before July 22, 2014; failure to comply with said requirements will involve the suspension of the marketing of such EU AIF.
The procedures for the authorization of EU AIFM and AIF, triggered according to the Pre-AIFMD Rules and pending as of July 22, 2013, shall be considered as terminated (because replaced by the passporting procedure by operation of law), unless the AIFM declares that its own home Country hasn’t implemented the AIFMD, in which case the authorization procedure for non-UCITS provided for by article 42.5 of the TUF (i.e., the Pre-AIFMD Rules) shall continue to be applicable in compliance with the principle explained in the preceding paragraph.
2.3 Non-EU AIFM
Until the full implementation of the AIFMD in Italy, the procedure set out by the Pre-AIFMD Rules (article 42.5 of the TUF) will continue to be applicable to the applications for marketing in Italy either AIF managed by a non-EU AIFM or non-EU AIF managed by EU AIFM.
We remain at disposal for any clarification.
STUDIO LEGALE CROCENZI E ASSOCIATI
Francesco P Crocenzi
 IMPORTANT INFORMATION This memorandum is not given in performance of a professional engagement during an attorney-client relationship and is only given for a general information to the reader regarding the matters discussed herein. Therefore, this document should not be relied upon as a legal opinion and no action should be taken on the basis of the information herein contained. © 2013 Francesco Paolo Crocenzi
2013 02 News SLCA New Interim Proced for Passporting AIF AIFM in Italy