Table of contents
Top stories
On the so-called “Ristori” Decrees
In response to the second pandemic wave, the Italian Government has introduced further economic measures in favour of enterprises, among which the granting of a non-repayable contribution in favour of those active in those sectors that have been most affected by the latest restrictions on operating activities (e.g., suspension of gaming and betting activities and shows open to the public), provided that they had a VAT number on 25 October 2020 and with turnover and fees registered on April of this year lower than two thirds as compared with the correspondent figures of the same month of last year, as well as to those who activated a VAT number as from 1 January 2019. The amount of the above-mentioned contribution in favour of enterprises located in Regions characterized by a scenario of high or maximum severity and a high level of risk of contagion has also been increased by 50% and the endowment of the fund set up to offset the economic businesses of such enterprises has been increased by 1.45 billion euro.
Finally, tax allowances (including the prolongation of advance payments on taxes on productive activities, and on individuals and enterprises’ income), as well as specific economic measures (e.g., benefits for tourism and entertainment employees) have been introduced by the Ristori-quater.
Main EU and Italian law provisions issued on the wake of the health emergency
- The EU Commission has (i) prolonged the “Temporary Framework” until 30 June 2021, except for those related to recapitalisation measures, which have been extended up until 30 September 2021, and (ii) has expanded its scope of application, by introducing a new measure in order to enable EU Member States to support companies facing a decline in turnover during the eligible period of at least 30% as compared to the same period of 2019, due to the health emergency.
EU Commission, prolongation and extending of “Temporary Framework”, of 13th October 2020.
- By means of a MiSE’s Decree, the financial endowment of the so-called “PON IC Reserve” of the Guarantee Fund for SMEs has been increased, in order to facilitate access to credit to the latter.
- By means of MiSE’s Decree, it has been established that funds granted for 2020 by means of the Relaunch Decree to the so-called “Venture Capital support fund”, aimed at supporting investment in innovative start-ups and SMEs’ capital, will be invested in an alternative securities FIA (the so-called “Relaunch Fund”), set-up and managed by an asset management company, reserved to professional investors, whose units are reserved for subscription to the MiSE itself.
Corporate/Laws of contract
On the lawfulness of the statutory clause imposing limits on the transfer of shares
The statutory clause imposing limits on the transfer of shares, by subordinating its effectiveness to the buyer’s adhesion to a shareholders’ agreement, is lawful, provided that the board of directors of the company in question makes its contents available to the shareholders, as well as to the aspiring buyers indicated by the latter.
On the lawfulness of the so-called “Russian roulette” statutory clause According to the Council of notaries of Florence, the so-called “Russian roulette” statutory clause (aiming at preventing a possible company’s dead-lock, by dissolving the partnership relationship) is lawful, regardless of the provision of a mechanism for predetermination the price of the shareholding to be transferred. In fact, the validity of such clause is not subject to the condition that the criteria for the determination of the price must be indicated, provided that the latter is at least equal to the value determinable upon withdrawal pursuant to the Italian Civil Code.
Corporate Governance Committee’s Q&A in support of the Corporate Governance Code
The Corporate Governance Committee has recently published the first set of Q&A, implementing the new Corporate Governance Code for listed companies. The latter are required to apply its principles and recommendations starting from the first financial year following 31 December 2020, as well as to inform the market about its implementation in a report to be published in 2022.
EBA’s recommendations in view of the so-called “Brexit” transition period
EBA has recently reminded to financial institutions that the transition period towards the so-called “Brexit” will expire next 31 December 2020. By then, they must have finalised the full execution of their contingency plans in accordance with the conditions agreed with NCAs, by ensuring adequate communication regarding their preparations and possible changes to their own EU clients.
EBA’s recommendations of 9th November in view of the Brexit transition period.
ESMA on the application of the EU’s trading obligation for shares post “Brexit”
As from 1s January 2021 the trading by EU investment firms of shares with an EEA ISIN on a UK trading venue in UK pound sterling will not be subject to the EU share trading obligations.
ESMA’s public statement, of 26th October 2020 on share trade obligations’application post Brexit
NCA’s notice to UK intermediaries’ clients in view of “Brexit”
The NCAs in the banking, financial and insurance sectors have recently issued a notice addressed to UK intermediaries’ clients established in Italy in view of Brexit. After 31 December 2020, such intermediaries will be able to continue to provide for investment services and activities in Italy only if duly authorised as (non-UE) firms. Since such deadline approaching, UK intermediaries’ clients are invited to verify that they have received adequate and complete information therefrom. If not, they are required to contact the intermediaries themselves, in order to obtain the necessary clarification on the existing relationships and their own rights and duties.
EBA’s public consultation on the revision of its Guidelines on sound remuneration policies
EBA’s public consultation on the revision of its own guidelines on sound remuneration policies, taking into account the novelties at issue introduced by CRD V, will end on 21 January 2021. In particular, EBA:
- suggests to financial institutions to implement a gender-neutral remuneration policy with regard to own staff; and
- will follow up on such institutions’ practices by means of a report to be published within two year after the publication of the final guidelines.
EBA’s public consultation of 25th October 2020 on revised guidelines on sound remuneration policies.
FBS’s public consultation on outsourcing
A FSB’s public consultation, which takes into account the possibility of a systemic risk arising from the concentration in the provision of some outsourced and third-party services, will end on 8 January 2021. In particular, FSB suggests to financial institutions to ensure that their contractual agreements with outsourcees and third parties grant to the latter (as well as to supervisory and resolution Authorities) appropriate rights to access, audit and request for information.
Entry into force of the European preservation seizure over bank accounts
On 1 December 2020, the Legislative Decree aligning national legislation with the EU provisions establishing a single procedure for the preservation seizure over bank accounts will enter into force. Such provisions aim at recovering cross-border credits in civil and commercial matters. To those procedures falling within the scope of the relevant EU legislation, apply, where compatible, the provisions of the Italian Code of Civil Procedure.
Council of State’s opinion on the Ministry of Economic and Finance’s draft decree concerning corporate officers’ requirements
The Council of State has provided for a positive opinion on a draft decree issued by the Ministry of Economic and Finance concerning suitability requirements and criteria for the appointment of bank’s corporate officers, specifying that it is in accordance with CRD V’s provisions and capable of filling the gaps existing in the current national regulatory framework, for it introduces a definition of independent director, professional requirements for the directors of all types of bank (including cooperative ones), as well as specific rules for monistic and dualistic corporate models.
The “floor” rate in a loan agreement according to the Civil Court of Rome
The presence of a “floor” rate clause does not turn per se a loan agreement into a financial instrument. Likewise, fixing a “minimum” interest rate, which the borrower must pay to the lender as an accessory to the obligation to return and remunerate the borrowed sum, does not change the essence of such agreement, by turning it from a contract with real effects having a financing purpose into a financial instrument.
Civil Court of Rome, decision no. 13966 of 13th October 2020.
The duty to act informed of bank’s directors without executive power
The duty to act informed of bank’s directors without executive power cannot be left to the executive directors’ reports. The so-called “non-executive” ones must in fact, act autonomously in order to monitor the activity carried out by the executives, for the purpose of assessing whether or not avoking to themselves the delegated power (remedy of competence of the whole board of directors). Non-executive directors are also liable with the executives ones if, being aware of the existence of prejudicial acts, have not done what they could so as to prevent their performance nor to eliminate or reduce their harmful consequences.
Civil Court of Cassation, decision no. 19556 of 18th September 2020.
ESMA identifies new strategic supervisory priorities
With the aim to ensure greater protection for investors and the orderly functioning of markets, ESMA has recently identified costs and performance of retail investment products, as well market data quality as the EU’s strategic priorities in relation to NCAs, coordinated by ESMA itself, will undertake supervisory actions during 2021.
ESMA, 13th November 2020, new strategic supervisory priorities.
EIOPA’s survey on the application of the IDD
The EIOPA has recently launched a survey on the application of the IDD – which will end on 1 February 2021 – with the aim to gather feedback from stakeholders on the improvement of quality of advice and selling methods, as well as on the impact of the new legislation on SMEs, for the purpose of introducing further improvements to the same.
EIOPA’s survey of 12th November 2020 on the application of IDD.
ESMA’s public consultation on guidelines on UCITS’ marketing
ESMA’s public consultation on its own guidelines on UCITS marketing communications, by which the Authority points out the requirements that such communications must meet in order to be in compliance (among which, transparency, specification of risks and rewards of purchasing UCITS’ units or shares) will end on 8 February 2021.
ESMA’s public consultation, of 9th November 2020, on guidelines on funds marketing communications.
ESMA specifies the framework of environmentally sustainable activities
ESMA’s public consultation, containing proposals aimed at ensuring a consistent application of the disclosure requirements under the Taxonomy Regulation to non-financial undertakings, will end 4 December 2020. Such proposals concern:
- for non-financial undertakings, the content of the so-called “key performance indicators” (percentage of turnover, capital and operational expenditure related to environmentally sustainable activities to be disclosed); and
- for asset managers, a calculation model based on eligible investments relating to the above-mentioned indicators, with suggestions on how to calculate and present them.
ESMA’s consultation paper, of 5th November 2020 on environmentally sustainable activities.
Towards the review of EU rules on alternative investment fund managers
The EU Commission has recently launched a public consultation (which will end on 29th January 2021) having as object the establishment of a more efficiently functioning of EU AIFs. In this respect, the Commission aims at gathering views from AIFMs, AIF’s distributors, industry representatives, investors and investor protection associations, financial markets authorities and citizens on potential changes to the AIFMD, with regard to (i) its scope and authorisation requirements, (ii) investors protection, and (iii) financial stability.
On the intermediary’s liability for providing its client with unsuitable information
If a client sue an intermediary, arguing that the latter has withheld information about the suitability of a specific investment transaction, the intermediary is accountable to such client for the occurred losses, unless it proves to have indeed provided such information or that the latter were irrelevant.
Civil Court of Cassation’s decision no. 23570 of 27th October 2020.
The signature beneath the MIFID questionnaire does not always “catch” the client
Investment transaction not preceded by a client’s profiling showing his/her real propensity to risk, taking into account the answers contained in the MIFID questionnaire, must be considered not suitable.
Financial Ombudsman’s decision no. 2998 of 19th October 2020.
On the failure to indicate the “mark to market” in an IRS contract
According to the Civil Court of Milan, the so-called “mark to market” element cannot be deemed as the object of the IRS contract, but it represents the value of substitution thereof at a given time. Therefore, the absence of a reference to the MtM calculation criteria does not imply the nullity of the contract itself for its object is neither determined nor determinable. Indeed the contract’s object consists of an exchange of differentials calculated on a certain amount.
Civil Court of Milan, decision no. 6224 of 14th October 2020
Financial services/FinTech
Just published the EU Regulation on crowdfunding
Requirements for (i) the provision of crowdfunding services, (ii) the organisation, authorisation and supervision of crowdfunding service providers, (iii) the operation of crowdfunding platforms as well as (iii) transparency toward investors and marketing communications are the main novelties introduced by the (EU) Regulation on crowdfunding. In order to ensure legal certainty on the scope of application of such Regulation, as well as of MIFID legislation, and avoid that the same investment activity be subject to multiple authorisations within the EU, legal persons authorised as crowdfunding service providers under the Regulation will not be subject to MIFID II’s application.
FSB’s report on the use of RegTech and SuperTech
FSB has recently published a report in which it points out the benefits for financial stability deriving from the use of technology applied to the reporting and compliance activities for regulated institutions (the so-called “RegTech”), as well as and to NCA’s activities (the so-called “SuperTech”). Whilst the latter could improve oversight, surveillance and analytical capabilities of the NCA’s, the use of RegTech could improve compliance and risk management outcomes of regulated institutions, and generate new insights into their business for an improved decision-making process.
FSB’s report of 9th October 2020 on the use of RegTech and SuperTech.
Compliance
Amendments to the implementing regulation on the “legality rating”
The Italian Antitrust Authority has recently amended its regulation having as object the so-called “legality rating”, by extending its subjective and objective scope of application thereof. In this regard, it has been established that:
- the directors of the applicant’s parent company, as well as those exercising direction and coordination must comply with the integrity requirement; and
- the applicant must declare not to have been convicted of, inter alia, usury, fraudulent transfer of assets and fraudulent bankruptcy.
Legislative Decree no. 231/2001
How the statute of limitations of the predicate offence and the acquittal of one of the defendants may affect the liability under Law no. 231/2001
Neither the statute of limitations of the predicate offence nor the acquittal of one of the defendants may automatically exclude the administrative liability of a legal entity. Indeed, the competent judge must independently ascertain the existence of the liability of such entity, by verifying, in one case, if the relevant facts represent a crime, and, by ascertaining the conducts carried out by the co-defendants in the interest or to the benefit of the entity, in the other one.
Data protection
EDPB’s guidelines on data protection by design & by default
The EDPB has recently adopted some guidelines on data protection by design & default, aimed at giving guidance:
- to controllers, on how they should implement appropriate measures in order to provide effective implementation of the data protection principles and, consequentially, data subjects’ rights; and
- to controllers and processors on how they can cooperate to achieve the so-called “DPbDD”.
EDPB’s guidelines on data protection by design & by default of 21st October 2020.
Capital Markets
On the functioning of SMEs’ growth market regime according to ESMA
ESMA has recently published a final report concerning the functioning of SMEs’ growth market regime, with proposals of Regulatory Technical Standards (RTS) relating to contractual template for a liquidity contract available to issuers of financial instruments admitted to trading on SME’s growth market, as well as proposals of Implementing Technical Standards (ITS) specifying the format of the insider list related to persons who have regular access to inside information.
ESMA’s Final Report of 27th October 20, on the functioning of SMEs’s growth market regime.
Amendments to the Markets Regulation
Consob (the Italian financial markets Authority) has recently amended its Markets Regulation with regard to participants to the capital of operators of regulated markets by:
- introducing the duty to notify the intention to acquire or sell a shareholding in the capital of a market operator or of the latter’s parent company; and
- defining the content of the above communication.
Consob’s Resolution no. 21356 of 15th October 2020, amending the Markets Regulation.
Corporate criminal law
The right to remain silent must also be ensured in the context of proceedings leading to sanctions having a “punitive” nature
EU market abuse provisions must be interpreted in a way that is consistent with the right to remain silent, pursuant to the EU Charter of Fundamental Rights. The latter, in fact, does not require EU Member States to punish persons who refuse to answer NCA’s questions, from which any responsibility may be inferred, which is subject to administrative of “quasi-criminal” amount. The right to remain silent covers, in particular, missing answers to questions concerning facts provided that the latter have a bearing on the conviction or the penalty imposed upon conclusion of such proceedings.
Opinion of the Advocate General of 27th October 2020, Case C‑481/19(text available also in Italian).
List of abbreviations
AIFs: Alternative Investment Funds.
AIFMD: Directive (EU) 2011/61 of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers.
AIFMs: Alternative Investment Funds Managers.
BoI: Bank of Italy.
CRD IV: Directive (EU) 2013/36 of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms.
CRD V: Directive (EU) 2019/878 of the European Parliament and of the Council of 20 May 2019 amending Directive 2013/36/EU as regards exempted entities, financial holding companies, mixed financial holding companies, remuneration, supervisory measures and powers and capital conservation measures (“Capital Requirements Directive”).
DPbDD: Data Protection by Design & by Default.
EBA: European Banking Authority.
EDPB: European Data Protection Board.
EEA: European Economic Area.
EIOPA: European Insurance and Occupational Pensions Authority.
ESMA: European Securities and Markets Authority.
EU: European Union.
EU Charter of Fundamental Rights: Charter adopted and declared by the Presidents of the EU Parliament, the Council and the Commission at the European Council of Nizza on 7 December 2000 (published in the UE Official Gazette no. C. 364 of 12 December 2000).
IDD: Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016, on insurance distribution.
IRS: Interest Rate Swap.
ISIN: International Securities Identification Number.
Markets Regulation: Consob Regulation no. 20249/2017, as amended.
MiSE: Ministry of Economic Development.
MEF: Ministry of Economic and Finance.
NCAs: National competent supervisory and regulatory Authorities.
Relaunch Decree: Decree Law no. 34 of 19 May 2020.
SMEs: Small and Medium Enterprises.
Taxonomy Regulation: Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088.
Temporary Framework: Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak adopted by EU Commission’s Communication (C/2020/1863) on 20 March 2020.