The Client Update no. 1/2020

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The European Green Deal Investment Plan

The European Commission has recently published the European Green Deal Investment Plan for the transition to a climate neutral, green, competitive and inclusive economy, which aims to:

1. mobilise at least one trillion Euros of sustainable investments over the next decade;
2. provide incentives to unlock and redirect public and private investment; and
3. create an enabling framework to facilitate the public and private investments to implement sustainable projects.

European Commission’s Press Release of 14^th January 2020 – “Financing the green transition: The European Green Deal Investment Plan and Just Transition Mechanism”.

The so-called “Milleproroghe” Decree

The annual Law Decree providing for an extension of terms of law, and introducing new organisational rules for the public administrations, as well as on technological innovation, was issued at the end of 2019. Accordingly:

1. the entry into force of the new class action has been extended to October 2020;
2. the time limit for the Government to appoint the Data Protection Authority’s and the Communications Regulatory Authority’s directors has been extended to 31 March 2020; and
3. the starting date of the electricity and natural gas free market for domestic customers and small enterprises has been postponed to 1^st January 2022.

Law Decree no 162 of 30^th December 2019 (published in the Official gazette no. 305 of 31^st December 2019), which must converted into law under penalty of ineffectiveness (text available in Italian only).

The 2020 Budget Law

The 2020 Budget Law has been recently published, which sets forth provisions in favour of small and medium-sized enterprises (“SMEs”), among which:

1. the transformation of super and hyper depreciation into a tax credit for investments in capital goods;
2. the extension of the so-called “training bonus 4.0”;
3. the introduction of a new tax credit for research, innovation and design, as well as the confirmation for the whole year of the tax credit to participate to international events organised in the sector;
4. the provision (by means of the Law known as “Nuova Sabatini” ) of the Ministry of Economic Development’s funding in favor of SMEs (as well as micro-enterprises) for investments in new machinery, factories and equipment; and
5. the strengthening of public funding for innovative investments in Southern Italy and the purchase of machinery, factories and equipment with low environmental impact.

Law no. 160 of 27^th December 2019 (published in the Ordinary Supplement no. 45 to the Official Gazette no. 304 of 30^th December 2019; text available in Italian only).

Banking law

First interventions against Banca Popolare di Bari’s crisis

In order to promote the recovery of Banca Popolare di Bari (“BPB”), which has been recently put into special administration by the Bank of Italy (“BoI”), a law decree was issued last month, which established that the national agency for the attraction of investments and the undertakings’ development (Agenzia nazionale per l’attrazione investimenti e lo sviluppo di impresa; “Invitalia”) will provide capital grants in favour of BPB aimed at strengthening of Banca del Mezzogiorno’s stock capital with a view to supporting the credit and entrepreneurial system in place in Southern Italy.

Contextually, the BdI has published on its website an in-depth analysis on the supervisory activity carried out on BPB since 2010 and the reasons for the latter’s current crisis.

Law Decree no. 142 of 16^th December 2019 (published in the Official Gazette no. 294 of 16^th December 2019 (text available in Italian only)).

Bank of Italy’s Note of 16^th December 2019 – “In-depth analysis on the Banca Popolare di Bari’s crisis” (text available in Italian only).

BoI’s consultation on its Risk Circular just ended

The public consultation on the proposed amendments to the BoI’s Risk Circular (the no. 139 of 11^th February 1991), aimed at ensuring the protection of data stored into the Central Credit Registered Data and guaranteeing the efficiency of access to the above data, has recently terminated. Among the main amendments, it is worth mentioning those relating to the modalities of access to their data from the reported subjects, as well as to the request to access such data by legal entities or delegated third parties.

Bank of Italy’s Consultation Paper of 20^th November 2019 (text available in Italian only).

Financial law

Changes to the European System of Financial Supervision (“ESFS”)

A package of EU law provisions has been recently issued, which modifies tasks, powers, governance and financing of the Supervisory Authorities in the banking and financial services sector (i.e., the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Securities and Markets Authority (jointly referred to as the European Supervisory Authorities (“ESAs”)), as well as of the European Systemic Risk Board, and strengthens the ESAs’ powers, as well as the European Banking Authority’s role in the AML field.

Regulation (EU) 2019/2175 of the European Parliament and of the Council of 18^th December 2019 amending Regulation (EU) no. 1093/2010 establishing a European Supervisory Authority (European Banking Authority), Regulation (EU) no. 1094/2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), Regulation (EU) no. 1095/2010 establishing a European Supervisory Authority (European Securities and Markets Authority), Regulation (EU) no. 600/2014 on markets in financial instruments (“MIFIR”), Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds, and Regulation (EU) 2015/847 on information accompanying transfers of funds (published in the Official Journal no. 334 of 27^th December 2019).

Regulation (EU) 2019/2176 of the European Parliament and of the Council of 18^th December 2019 amending Regulation (EU) no. 1092/2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board (published in the Official Journal no. 334 of 27^th December 2019).

Directive (EU) 2019/2177 of The European Parliament and of the Council of 18^th December 2019 amending Directive 2009/138/EC on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), Directive 2014/65/EU on markets in financial instruments (“MIFID II”) and Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money-laundering or terrorist financing (published in the Official Journal no. 334 of 27^th December 2019).

Amendments to the Regulation on Securities and Financial Ombudsman under public consultation

The Commissione Nazionale per la Società e la Borsa (“Consob”) has recently launched a public consultation, which will end on 3^rd February 2020, proposing some amendments to its Regulation on Securities and Financial Ombudsman aimed at simplifying the procedure before it and improving how it works. Among the main amendments, it is worth noting:

1. the update of the key definitions contained therein in order to bring them into line with the most recent changes made to the Consolidated Financial Act;
2. the extension of the Ombudsman’s scope of activity and competences;
3. the composition of its Board and the professionalism and integrity requirements to be held by the latter’s members;
4. the rules governing the proceedings before it; and
5. the enforcement of its decisions.

Consob’s Consultation Paper of 19^th December 2019 – “Amendments concerning the Regulation on Securities and Financial Ombudsman (Resolution no. 19602 of 4^th May 2016)” (text available in Italian only).

Financial services/FinTech

Consob and the BoI’s common strategy on cyber security

Consob and the BoI has just defined a common strategy for the strengthening of the cyber security of the Italian financial system, fight the cyber threats related to the use of new technologies and, in general, ensure the reliability of the above system. To this end, regulatory and supervisory measures will be established for promoting public-private cooperation and awareness on cyber risks with regard to payment systems, central counterparties, central depositories and trading venues.

Consob’s and Bank of Italy’s Press Release of 16^th January 2020 – “Cyber Security: Consob-Bank of Italy joint strategy for the cyber security of the financial sector”.

Consob’s report on crypto-activities

Consob has recently published a report on the initial coin offering (“ICOs”) and exchanges of crypto-activities that are not comparable to financial instruments, as a contribution to the long-awaited issuance of the related regulatory regime. The report proposes definitions of the said activities, as well as provisions concerning offering and trading platforms, and digital portfolio services for safe keeping and transfer of crypto-assets.

Consob’s Final Report of 2^nd January 2020, “The initial coin offers and exchanges of crypto-activities” (text available in Italian only).

The European Commission has launched two consultations on digital finance

In order to promote digital finance in Europe and make the financial sector more secure and resilient, the European Commission has recently launched two public consultation (that will end on 12^th March 2020), having as object the development of an EU regulatory framework for crypto-assets, as well as the requirements on information and communication technology and security risk management.

European Commission’s Public Consultation on “Financial services – EU regulatory framework for crypto-assets” of 19^th December 2019.

European Commission’s Public Consultation on “Financial services – improving resilience against cyberattacks” of 19^th December 2019.

Compliance

Legislative Decree no. 231/2001

Configurability of entities’ liability also for tax offences

By means of the newly-enacted “Tax Decree”, the following tax offences has been included among the predicate offences referred to in Legislative Decree no. 231/01:

1. fraudulent declaration through the use of invoices or other documents for non-existent transactions (even for amounts lower than EUR100,000);
2. fraudulent declaration by means of other deceptions;
3. issue of invoices or other documents for non-existent operations;
4. concealment and destruction of accounting documents; and
5. fraudulent deduction from the tax returns.

An increase of the envisaged penalties has been also introduced, whether the legal entity in question gains a significant profit as a result of the commission of one or more of the aforesaid offences.

Law no. 157 of 19^th December 2019, conversion into law, with amendments, of Law Decree no. 124 of 26^th October 2019, containing urgent provisions on tax matters and for non-deferrable needs (published in the Official Gazette no. 301 of 24^th December 2019).

Data protection

Court’s judgements on the personal data’s economic value

Partially confirming the Italian Antitrust Authority’s decision of 2018, which sanctioned Facebook for unfair commercial practices, the Regional Administrative Court of Lazio has recently ruled that, with regard to the contract for use of a social network service, the economic value of the subscribers’ personal data implies that the social network provider must comply with the duties of clarity, completeness and no-deceptiveness of the information to be provided to the end-users for consumer protection’s purpose. Consequently, the provider must priorly inform end-users that the latter’s personal data will be used for commercial purposes.

Regional Administrative Court of Lazio’s decisions nos. 260 and 261 of 10^th January 2020.

Anti-money laundering

On the implementation of the Financial Action Task Force (“FATF”)’s recommendations

The FATF has recently published a table containing the ratings obtained by each assessed country with regard to the level of effectiveness of national AML legislation and compliance with its own recommendations. In particular, with reference to the AML Italian legislation, it appears to need moderate improvements, as far as its effectiveness is concerned, being it largely compliant with FATF’s recommendations.

FATF, Consolidated table of assessment ratings updated on 7^th January 2020.

Capital Markets

New regime of EU covered bonds

For the purpose of implementing the Capital Markets Union and ensuring a greater investor protection, the following EU provisions (which will entered into application from 8^th July 2022) have recently been adopted:

1. a regulation on the additional requirements to be held by EU covered bonds in order to benefit from the favourable capital treatment already envisaged under the applicable laws; and
2. a directive, which sets out the requirements for issuing the afore-said covered bonds, as well as for the latter’s structural features, aimed at establishing a common framework, for the smooth and continuous development of a bond market and a reduction of potential risks to financial stability.

Regulation (EU) 2019/2160 of the European Parliament and of the Council of 27^th November 2019 amending Regulation (EU) no. 575/2013 as regards exposures in the form of covered bonds (published in the Official Journal no. 328 of 18^th December 2019).

Directive (EU) 2019/2162 of the European Parliament and of the Council of 27^th November 2019 on the issue of covered bonds and covered bond public supervision and amending Directives 2009/65/EC and 2014/59/EU (published in the Official Journal no. 328 of 18^th December 2019).

Corporate criminal law

Market abuse: prohibition on double penalties and proportionality of the sanctionary regime

With regard to market abuse, there is no violation of the principle of “ne bis in idem” (whereby sanctions cannot be imposed twice for one and the same illicit conduct), whenever the penalties inflicted on the offender at the end of the criminal proceeding, as well as of the administrative one before Consob is proportionate to the overall disvalue of the relevant fact, with the consequence that it is left to the competent judge to assess such proportionality on the basis not only of the criminal offence, but also of the administrative (yet substantially criminal) one.

Penal Court of Cassation, Sec. V, decision no. 397 of 9^th January 2020 (text available in Italian only).

Procedural law

Qualification of “serious and irreparable damages” for the stay execution of a judgement

For the purpose of ascertaining the existence of the serious and irreparable damage, necessary for granting the stay of execution of a decision appealed before the Court of Cassation, one must provide evidence of the state of inactivity of the creditor company, the latter’s balance sheets with a loss, as well as absence of own real estate properties that can be subjected to a forced expropriation. Such elements shall be considered as indexes of the creditor company’s insolvency and, foreseeable irrecoverableness of the sums paid to such company in execution of the appealed decision.

Rome Court of Appeal, decision of 13^th November 2019.