Table of contents
Corporate/ Laws of contract
Transposition of EU Shareholders’ Rights Directive
On 10th June 2019, the pubblic consultation on the Legislative Decree transposing the Directive on shareholders’ rights terminated. The latter aims at improving the listed companies’ corporate governance and strengthening their competitiveness and long-term sustainability, whilst increasing transparency of ownership structures and encouraging the active participation of shareholders.
Directive (EU) 2017/828 of the European Parliament and of the Council of 17thMay 2017 (O.J. no. L.132 of 20thMay 2017).
Legislative Decree no. 49 of 10thJune 2019 (Official Gazette no. 134 of 10thJune 2019 (text available in Italian only)).
Withdrawal of the minority share/quotaholder following the change of the profit distribution clause
Following a merger by incorporation, a change in the clause of the merged company’s by-laws, which implies an increase of the profits to be allocated to reserve, thereby proportionally reducing the distributable profits, justifies the withdrawal of the minority share/quotaholder.
Civil Court of Cassation, I Sec., decision no. 13845 of 22ndMay 2019 (text available in Italian only).
Liability of the bank for failing to sell pledged assets subject to deterioration
If a bank does not sell the pledged assets that are subject to deterioration, it breaches the duty of good faith in the execution of the contract.
Civil Court of Cassation, I Sec., decision no. 12863 of 14thMay 2019 (text available in Italian only).
Banking law
Published the package of EU law reforms aimed at strengthening resilience and resolvability of European banks
A set of new EU law provisions (namely, BRRD II, SRMR II, CRR II and CRD V) has been recently published, with the aim to ensure financial stability whilst strengthening the global competitiveness of the EU banking sector. In particular, (a) BRRD II amends the previous Directive with regard to the loss-absorbing and recapitalisation system of credit institutions and investment firms, (b) SRMR II introduces uniform procedures under the Single Resolution Mechanism and the Single Resolution Fund for the resolution of credit institutions and investment firms, (c) CRR II (that governs banks’ capital requirements, covers leverage ratio, net stable funding ratio, requirements) for own funds and eligible liabilities, as well as market risks and exposures, and (d) CRD V sets forth measures targeted to exempted entities, financial holding companies (and mixed ones), as well as remuneration, capital conservation, and supervisory measures.
Directive (EU) 2019/879 of the European Parliament and of the Council of 20thMay 2019.
Regulation (EU) 2019/877 of the European Parliament and of the Council of 20thMay 2019.
Regulation (EU) 2019/876 of the European Parliament and of the Council of 20thMay 2019.
Directive (EU) 2019/878 of the European Parliament and of the Council of 20thMay 2019.
Final Remarks of the Governor of the Bank of Italy: technological innovation in the banking system
According to the Governor of the Bank of Italy upon presentation of the latter’s annual report as of 31stDecember 2018, in Europe the use of digital channel in banking intermediation is in constant growth and FinTech is rapidly transforming the structure of the financial industry. New technologies, including management of big data, machine learning and distributed ledger technologies are opening the sector to new competitors, including the “Big Techs”. Investment in financial innovation has increased at global level, but it is still modest in Italy. The smaller banks, for which this investment is too costly, can joint initiatives for the outsourcing of such services. The spread of new technologies, however, also brings about new risks regarding cyber security and customer data protection, thereby requiring good care and advance planning.
The Governor’s Concluding Remarks. Annual Report of 31stMay 2019.
The documentation relating to the current account can be requested to the bank also in the course of the proceedings
The current account holder has the right to obtain from the bank all the documentation relating to his/her current account(s) also in the course of the proceedings pending against the bank itself, through any means, including the judge’s order of exhibition.
Civil Court of Cassation, I Sec., decision no. 14231 of 24thMay 2019 (text available in Italian only).
The adoption by a bank of a standard open-end guarantee contract not in line with the Bank of Italy’s related provision amounts per se to an anticompetitive behaviour
Whether a bank adopts as a standard contract the open-end (omnibus) guarantee substantially based on the scheme provided by the Italian Banks’ Association (ABI), it may be caught to have breached the relevant provisions of Italian Competition Law regardless of the application or not of a sanction. Moreover, the judge must verify if the guarantee actually issued contains or not scheme that substantially reproduce the content of the afore-said ABI’s standard clauses, which are by themselves capable of distorting competition in the Italian market.
Civil Court of Cassation, I Sec., decision no. 13846 of 22ndMay 2019 (text available in Italian only).
Financial law
Conversion into law of the so-called “Brexit” Decree
The so-called “Brexit” Decree has been recently converted into law, which introduces a transitional framework applicable in case of “no-deal” withdrawal of the United Kingdom from the EU. It contains urgent measures in order to ensure safety, stability and integrity of the EU financial market.
Law no. 41 of 20thMay 2019 converting Law Decree no. 22 of 25thMarch 2019 (in Official Gazette no. 120 of 24thMay 2019(text available in Italian only)).
President of COVIP’s Final Remarks to the Annual Report for 2018
On 12th June 2019, the President of COVIP (Pension Funds Supervision Commission) presented the annual report on the activity carried out by the Authority in 2018, illustrating the state of the pensions sector and focusing, inter alia, on its regulatory evolution. With reference to pension funds, he pointed out that, in 2018, a) the Decree transposing the IORP II Directive was approved (namely, Legislative Decree no. 147 of 13th December 2018, entered into force on 2nd February 2019), which aims to strengthen the governance of the funds themselves, improving their decision-making and risks management processes, and b) COVIP participated to the preparatory work of the EU Regulation on Pan-European Personal Pensions (PEPP), which is expected to be approved shortly.
Conversely, with regard to professional funds, the President highlighted the missing adoption of the inter-ministerial regulation, which would provide for a unitary regulation of the sector.
President of COVIP’s Final Remark of 12thJune 2019 to the Report for the year 2018 (text available in Italian only).
Professional liability of the bank related to the sale of diamonds to retail clients
In case a retail client purchases diamonds as a form of alternative investment proposed by a bank, the latter is contractually liable vis-á-vis the client for breach of the duty of diligence and consumer protection, by virtue of its professional competence. In fact, the sale of diamonds does not have a financial nature, as the transfer of property is not linked to a financial contract, given that the latter does not encompass also the purchase of tangible assets aimed at direct use or consumption or non-financial investment purposes.
Civil Court of Verona, Sec. III, order of 20thMay 2019.
Constitutional illegality of the mandatory confiscation for violation of the proportionality principle
The Constitutional Court has declared the illegitimacy of article 187-sexies of the Consolidated Financial Act in so far as it provides for, as a sanction additional to the pecuniary one, the mandatory confiscation (direct or by equivalent) of the product of the illicit behavior and not only of the profit thereof. The underlying rationale being that the aforesaid confiscation breaches the principles of proportionality of the penalty and equality, as well as of the protection of the private property, enshrined in the Constitution and the relevant EU law.
Constitutional Court decision no. 112 of 10thMay 2019 (text available in Italian only).
Financial services/FinTech
Italian Supervisory Authorities comply with ESMA Guidelines on conflict of interest
In order to promote a common, uniform and consistent application of EU law, CONSOB and the Bank of Italy, competent for the supervision of Italian central counterparties, have announced to comply with ESMA Guidelines on the management of conflicts of interest of central counterparties dated 5thApril 2019, embedding them into their respective supervisory practices. Such Guidelines clarify, inter alia, the concept of conflicts of interest and specify rules and procedures that central counterparties must follow in relation to the identification, prevention and management of such conflicts.
CONSOB Notice of 3rdJune 2019.
ESMA Guidelines on CCP conflict of interest management of 5thApril 2019.
CONSOB Consultation on ICOs and crypto-activity exchanges
On 5th June 2019, the public consultation launched by CONSOB on a document related to ICOs terminated, which points out the need to provide for an ad hoc regulation in respect of those tokens that cannot be qualified as financial instruments or products. According to CONSOB, the equity crowdfunding platforms are the most suitable subjects to deal with crypto-activity offers, yet clarifying that offers outside the regulated platforms are also lawful (although they would not enjoy the same protections provided for those who decide to access the regulated market).
CONSOB, “Initial offers and crypto-activity exchanges”. Document for discussion of 19thMarch 2019 (text available in Italian only).
Abnormal use of virtual currency
In order to prevent that the virtual currency’s system could facilitate money laundering and terrorist financing, the Financial Information Unit for Italy has clarified that financial intermediaries must carefully assess cash withdrawal and/or deposit transactions, as well as prepaid credit card ones, connected to the purchase or sale of virtual currencies, carried out for significant amounts in a limited period of time.
Communication of the Financial Information Unit for Italy of 28thMay 2019 (text available in Italian only).
Responsibility of the board of internal auditors (collegio sindacale) for failure to report the director’s conflicts of interest
The obligation of a director of a listed company in the presence of a conflict of interests to priory disclose the latter to the Board of directors and the internal auditors has a general scope and disregards an actual impact of such conflict on the specific Board’s resolution to be taken. Therefore, pursuant to the relevant provision of financial intermediation law, the Board of internal auditors may be held liable for breach of communication to CONSOB (Commissione Nazionale per la Società e la Borsa; the Italian securities regulator), having as object the aforesaid conflict of interests not previously disclosed by the director in question.
Civil Court of Cassation, I Sec., decision no. 33047 of 20thDecember 2018 (text available in Italian only).
CONSOB’s joint and several liability for omitted supervision on stockbrokers
According to the Supreme Court, CONSOB, as the “Authority for the protection of savings”, is legally obliged to prevent the damages caused to investors by the illicit behaviour of a stockbroker, on the basis of its own supervisory powers, by timely adopting adequate measures. In case it omits to exercise such authority, CONSOB shall respond, jointly and severally, with the stockbroker for the damages caused to the investors.
Civil Court of Cassation, III Sec., decision no. 1070 of 17thJanuary 2019 (text available in Italian only).
Compliance
Legislative Decree no. 231/2001
Fraud in sport competitions and abusive exercise of gaming betting activities now relevant under Law 231
A company can be held liable pursuant to Legislative Decree no. 231/2001, for fraud in sport competitions and abusive exercise of gaming or betting activities, committed in the interest or to the benefit of the company itself by a director or its employees.
Law. no. 39 of 3rdMay 2019 (text available in Italian only).
Data protection
The free flow of non-personal data in the European Union
Following the entry into force of the EU Regulation on the free flow of non-personal data, the European Commission has issued some guidelines, which provides for instructions to users on the free flow of personal data and treatment across the EU whilst regulating the relationships between such Regulation and the GDPR (Regulation no. 2016/679 EU of 27thApril 2016). As a result, on the one hand, EU Member States cannot issue laws that arbitrarily impose to keep non-personal data within the national territory and, on the other hand, national authorities can carry out verifications and, as the case may be, fine people who do not allow to access free-flow data.
Regulation (EU) 2018/1807 of the European Parliament and of the Council of 14thNovember 2018 on a framework for the free flow of non-personal data in the European Union (O.J. no. L. 303 of 28thNovember 2018).
Communication from the Commission to the European Parliament and the Council of 29thMay 2019.
Ministry of Justice’s circular letter on data protection impact assessment (so-called “DPIA”)
The Ministry of Justice has clarified the framework relating to the data protection impact assessment (whose Italian acronym is DPIA), envisaged under the GDPR. If a data processing involves a high risk of infringement of people’s rights and freedoms, the data controller must carry out an impact assessment (so-called “DPIA”), subject to the prior mandatory opinion of the data protection officer (DPO), before proceeding with the processing itself. By means of the DPIA it is possible to determine origin, nature and gravity of the risks. It must also include suitable measures to deal with the above risks. Finally, if, following the DPIA, a high risk of data breach still remains, the controller must priorly consult with the Italian Privacy Authority.
Ministry of Justice’s circular letter of 31st May 2019 (text available in Italian only).
Cybersecurity Act: how the role of ENISA and the IT security certification change
The so-called “Cybersecurity Act” has been recently published in the Official Journal, which aims to create a single market for cyber security in terms of products, services and processes, as well as to increase consumers’ trust in digital technologies. The Act consists of two parts: in the first one, it specifies the role of ENISA (European Union Agency for Network and Information Security) and it delegates to the same the authority to support the management of cyber incidents by EU Member States; in the second part, it introduces an European system for the certification of IT security of devices connected to Internet and other digital products and services.
Regulation (EU) 2019/881 of the European Parliament and the Council of 17thApril 2019 (O. J. of 7thJune 2019).
The communication to the interested parties of an occurred data breach must be detailed
The Italian Privacy Authority has clarify that a personal data breach, once occurred, must be notified to the interested data subject(s) in a detailed format (i.e. it must include a description of the nature of the occurred breach and the possible consequences thereof, as well as indicate the specific measures to be adopted to avoid prejudicial consequences, if any (e.g., the recommendation to no longer use the compromised IT credentials, modify any password that is the same or similar to the one subject to the breach, even if it is used to access another online service)).
Italian Privacy Authority provision of 30thApril 2019 (text available in Italian only).
Anti-money laundering
New EU Regulation on anti-money laundering
A new EU Regulation on anti-money laundering has been recently published in the O.J., which contains instructions on requirements, procedures and control systems that financial institutions must adopt to counter-fir money laundering and terrorist financing. Among such instructions, it is worth noting the minimum actions to be taken in case of a branch established in non-EU countries (in which there are no equivalent anti-money laundering EU provisions) under majority control of one and the same bank or financial institution.
Commission delegated Regulation no. 2019/758 (O.J. of 14thMay 2019).
Capital Markets
The forthcoming entry into force of the new Prospectus Regulation
On 21st July 2019 the new Prospectus Regulation will enter into force, which introduces a favorable regime for listed issuers and SMEs, simplifying the content of the related prospectus, enhancing the specific characteristics of the issuers, as well as the financial instruments offered or listed, whilst reducing the administrative burden for issuers and facilitating the SMEs’ access to the capital market.
Regulation (EU) 2017/1129 of the European Parliament and the Council of 14thJune 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (O.J no. L.168 of 30thJune 2017).
Single electronic format for issuer’s annual report
Starting from 1st January 2020, listed companies must draw up their annual financial report on a special electronic format identified in adoption of the Transparency Directive.
Delegated Regulation (EU) no. 815/2008, (O.J. no. L 143 of 29thMay 2019).
Corporate criminal law
Non-occasional granting of loans to a restricted, yet potentially indeterminate, number of people triggers out the crime of abusive exercise of financial activity
According to the Supreme Court, whoever, without authorisation and independently from a profit-making purpose, grants loans (in any form, continuously and not occasionally) to a limited number of persons (yet potentially indeterminate) may be charged with the crime of abusive exercise of financial activity, being it sufficient to that end the fact that the target clients are potentially indefinite in number.
Penal Court of Cassation, V Sec., decision no. 24447 of 31stMay 2019 (text available in Italian only).
Self-laundering is not per se triggered out from a false in voluntary disclosure
The crime of self-laundering presupposes that the offender directly draws from the committed offence a profit to be reinvested in economic activities, which may consist both in a capital increase and in a saving. Therefore, if someone is challenged with false in the context of a voluntary disclosure procedure, the crime of self-laundering is not configurable per se should the person in question have limited him/herself to falsely declare the existence abroad of some of his/her own assets, without obtaining any patrimonial advantage therefrom.
Penal Court of Cassation, II Sec., decision no. 14101 of 1stApril 2019 (text available in Italian only).
Procedural law
New class action law
A new class action law has been recently published, according to which the holders of allegedly breached “homogeneous individual rights” can sue for damages companies, public services or utilities providers, whether for contractual and/or non-contractual liability. By virtue of the new law, the provisions on the class action have been moved from the Consumer Code to the Code of Civil Procedure. The related action can be brought only before the special section of the Courts competent for corporate matters, by introducing an ordinary proceedings, whilst also envisaging the possibility to lodge a petition for collective inhibitory action.
Law no. 31 of 12th April 2019 (in Official Gazette no. 92 of 18th April 2019 due to enter into force on 19th April 2020 (text available in Italian only)).
External limits of the administrative judge’s control on sanctionary measures issued by independent Supervisory Authorities
The administrative judge cannot substitute a Supervisory Authority’s measure with its own decision, yet its jurisdictional review cannot be limited exclusively to the formal aspects of the administrative measure challenged, since the principle of full jurisdictional protection implies that also disputes in point of fact must be sorted out by the competent judge. The latter’s assessment, however, falling within the scope of a review of legitimacy and not of merit, cannot be extended, in any case, to technical profiles that do not present an objective margin of questionability.
Joint Sections of the Court of Cassation, order no. 99129 of 7thMay 2019 (text available in Italian only).