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I Regulatory framework on distribution of AIFs in Italy and additional classes of investors eligible for lower thresholds

AIFs are classified by the Italian law as “reserved” and “non-reserved”, whereas the second category covers the AIFs that allow subscriptions by all classes of investors.
Otherwise, the “Reserved AIFs” can be subscribed by either professional investors or by non-professional investors meeting the requirements set out by decrees issued by the Italian Minister of Economy and Finance (“MEF”). Until the end of March, these non-professional investors that were treated as professional investors for the purpose of the marketing scope of AIFs, including the eligibility for the passport under article 32 of the AIFMD (hereinafter, the “Non Professional Investors in Reserved AIF”) were persons investing in the AIF at least Euro 500K with a single cash payment, no commitments.
This is stated in article 14, para. 2 of the MEF Decree no 30/2015; in particular, Non Professional Investors in Reserved AIF that invest at least Euro 500K can be approached by fund distributors carrying out placing services/marketing, thus their investment has to be preceded by the assessment of appropriateness that accompanies the “placing”.

The MEF Decree no 19/2022, entered into force on March 30, 2022, has introduced an additional class of Non Professional Investors in Reserved AIF, by adding two new sub-paragraph to the above-mentioned article 14, para 2, of the MEF Decree no 30/2015.

These two new classes are:
a) Non Professional Investors in Reserved AIF who, as a result of a recommendation given by an authorised intermediary in the context of the service of investment advice, subscribe or purchase units or shares of an AIF for an initial amount of no less than Euro 100K, provided that, following that subscription or purchase, the total amount of the investments in “reserved AIFs” does not exceed 10 per cent of the overall financial portfolio (cash, financial insurance products, other financial products) kept with all the financial intermediaries by the relevant Non Professional Investor in Reserved AIF. The minimum initial shareholding is not fractionable; and
b) entities authorized to provide portfolio management services which, in the context of that service, subscribe or purchase units or shares of the AIF for an initial amount of no less than Euro 100K on behalf of the Non Professional Investor in Reserved AIF of which they manage the investment portfolio.
In order to actually administer the verification of the 10% limit set out in letter b) above, the MEF Decree no 19/2022 provides for an obligation of the relevant Non Professional Investor in Reserved AIF to give complete information on his/her financial investments to the relevant intermediary.

It is important to note that the MEF Decree no 19/2022 didn’t lower the Euro 500K threshold for being treated as professional investors for the purpose of the marketing of AIFs, but introduced a new class of Non Professional Investors in Reserved AIF that can invest Euro 100K provided that this is done within the scope of an investment service that imply a prior assessment of suitability – i.e., non-discretionary investment advice or management of investment portfolios on a discretionary basis – and that the 10% threshold is complied with in case of investments within the scope of investment advisory services.
In other words, for the investments outside the scope of investment advice/portfolio management, the minimum Euro 500K threshold remains unchanged.
With regard to the foreign AIFs that intend to use this additional option for distributing to retail investors, it is expected that CONSOB will recommend to clearly explain the distribution formalities in the Article 32 Notification Letter, including, without limitation, the context of the advisory/portfolio management services in which the Euro 100k investments can be made and the 10% limit in case of investment advice.

 

[1] 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.  © 2022 Francesco Paolo Crocenzi