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Top stories
How the National Innovation Fund will invest
The Ministry of Economic Development has recently issued a decree, which sets out the modalities by means of which the National Innovation Fund (whose Italian acronym is FNI) may invest in support of venture capital related business. Among them:
- venture capital funds managed by companies authorised by the Bank of Italy (“BoI”), or (directly) startups, scaleups and/or unlisted SMEs with an high potential capital growth; and
- listed companies up to 15% of their stock capital.
The FNI has a starting financial endowment, provided for in the Budget Law for 2019, of approximately 1 billion Euros and will be managed by Cdp Group.
Corporate/Laws of contract
Limits to the right of information of the non-executive quota-holder of a limited liability company on the latter’s controlled companies
The non-executive quota-holder of a limited liability company has the right to access the corporate documents pursuant to art. 2476, paragraph 2, of the Italian Civil Code, but not also to those of the LLC’s controlled companies, for the above right of information is limited to “know the controlled companies’ corporate documents, as well as those related to the most important management choices” of the same companies.
Court of Turin, order dated 20th February 2019.
Banking law
Updated Bank of Italy’s Supervisory Provisions for banks in implementation of PSDII
The BoI’s Supervisory Provisions for banks have been recently updated, which transpose some provisions issued by the European Banking Authority (“EBA“) containing:
- guidelines on measures to tackle operational risks and increase payments’ security, to report serious incidents, as well as on the conditions to be met for exemption from the emergency mechanism envisaged in implementation of the Directive (EU) 2015/2366 (“PSDII”);
- recommendations on outsourcing to cloud service providers; and
- information on the administrative procedures introduced by the PSD2, which envisage technical standards for the so-called “strong authentication” of the clients and open communication standards.
New Bank of Italy Supervisory Provisions Payment for institutions and electronic money institutions
The BoI has recently issued new provisions in question for payment institutions (“PI“) and electronic money institutions (whose Italian acronym is “IMEL“), which have object:
- the modalities by which a bank can deny or revoke the opening or keeping of a payment account at the same bank in favor of a PI;
- the application also to a PI and an IMEL of the definition of “own funds” (capital stock that each bank must hold to satisfy the prudential supervisory requisites);
- the strengthening of organisational control procedures;
- the registration procedure for the Account Information Services Providers (“AISP”), and the additional requisites that the latter must hold to operate, given the nature as payment services of those provided by them; and
- the carrying out of cross-border and AISPs by other activities.
Nullity of the so-called “combined” transactions
Ruling on the recent cases involving the co-operative banks established in the Veneto region, the Civil Court of Venice has declared null and void the loan granted to a client by a cooperative bank for the purchase of its own shares (the so-called “combined” transactions), pointing out that the prohibition of financial aid provided by art, 2358 of the Italian Civil Code for the purchase of shares of a joint-stock company applies also to co-operative companies, as the mutual purpose of the latter does not per se justify the carrying out of transactions capable of infringing the economic balance of the corporate structure of such companies.
Civil Court of Venice, decisions nos. 1758 and 1760 of 29th July 2019.
A bank can be sanctioned for violation of its information obligations vis-á-vis the client even if the latter has ratified its operations
A financial transaction carried out without evidence of the related order by the client may acquire full validity following the latter’s ratification. However, the bank must priorly communicate to the client all the risks arising from the proposed transaction. Therefore, the ratification is not sufficient to exempt the bank from liability for failure to fulfil the disclosure obligation on the transaction’s risks.
Civil Court of Cassation, Section VI, order no. 13709 of 22th May 2019.
Financial law
New EU Regulation on the Pan-European Personal Pension Product
The European Regulation related to the pan-European Personal Pension Product (“PEPP”) has been recently published, which sets out provisions on a long-term complementary insurance instrument that does not envisage reimbursements except in limited cases. In order to guarantee a uniform application thereof in the EU, the Regulation laids down rules on PEPPs’ registration, distribution and supervision.
ESMA consultation on compliance according to MiFID II
The European Securities and Markets Authority (“ESMA”) submitted for consultation the new guidelines on the compliance according to Directive 2014/65/UE on market in financial instruments (“MiFID II”), among which:
- the assignment to compliance not only of consultancy, but also of assistance related tasks;
- the extension of the scope of the compliance officer’s annual report, so as to include the handling of complaints;
- the need for the compliance officer to satisfy the requirements of professional ethics and personal integrity; and
- the confirmation of the principle that, in the event of an outsourcing, the investment firm will in any case be fully responsible for it.
The deadline for participating to the consultation is 15th October 2019.
Consultazione ESMA sui requisiti della funzioni di conformità secondo MIFID II del 15 luglio 2019.
Amendment to the Markets Regulation
The Commissione Nazionale per le Società e la Borsa (“Consob”)’s Regulation on financial markets has been recently amended, providing for, inter alia, (i) the shareholdings that may be held by the regulated market’s management company, (ii) the latter’s information obligations, as well as (iii) the modalities for communicating the intention to use the exemption by virtue of the exercise of an ancillary activity. The above amendments entered into force on 11th September, last.
Supplemental and amending measures to MiFID II implementing decree
A public consultation, launched by the Ministry of Economy and Finance (“MEF“), on supplemental and amending measures to the decree transposing MiFID II into national law, ended last June, providing for:
- in the area of supervision, a more detail allotment of competences between Consob and the Italian Insurance Supervisory Authority (“IVASS”) on the distribution of insurance based investment product (“IBIPs”), as well as the strengthening of Consob’s powers of to combat phenomena of abusive exercise of investment activity;
- in relation to the door-to-door selling, the possibility for asset managers to extend such activity to their own pension funds; and
- with regard to crowdfunding, the introduction of the principle whereby portal managers cannot access investor compensation schemes and must provide themselves with a full insurance coverage.
New Consob Operating Guide on systematic internalisers
Consob has recently published a new guide to systematic internalisers operating in Italy, providing for:
- the obligation to notify their status to Consob itself;
- the conditions of their operations;
- the publication of irrevocable quotes relating to equity and equity-like financial instruments, as well as to non-equity financial instruments; and, finally
- the set of informations to be provided to Consob.
Transaction on own shares and repurchase of bonds: new Consob guidelines expected soon
The consultation on Consob’s proposed guidelines for transactions on own shares, as well as a communication on the repurchase of bonds has been recently concluded. The new guideline (and the new communication) will include information on transparency, operating procedures, limits and conditions for transactions on own shares (against the risks of market abuse) and for the repurchase of bonds at predetermined conditions, as well as information to be provided to clients.
Irretroactivity of the confiscation for an equivalent value
The ancillary sanction of confiscation for equivalent cannot be applied retroactively to the torts committed before the introduction of such a measure by means of the law which has decriminalised the offence of insider trading (namely, Law no. 62 of 18th April 2005), for such administrative sanctioning treatment is, in practice, more burdensome than that previously in force.
Validity of the framework agreement for the provision of financial services signed only by the client
The requirement for the written form of the framework agreement that regulates the provision of financial services is deemed to be met if (i) the agreement is drawn up in writing and (ii) a copy thereof is given to the client, even if it has been signed only by the latter. Indeed, the intermediary’s signature is not necessary, since the latter’s consent can be inferred from his conduct.
The favor rei principle is not applicable in relation to administrative proceedings
According to the Supreme Court, in case of breach of any of the provisions relating to clients’ profiling and suitability assessment under MIFID, as well as to the pricing of the products offered, committed prior to 8th March 2016 (date of the entry into force of the new regime introduced upon implementation of CRDIV (Directive 2013/36/UE) and CRR (Regulation (EU) no. 575/2013) in Italy), Consob, in sanctioning a bank’s director, who has committed the offence, cannot apply the treatment most favorable to the latter that entered in force from 8th March 2016. Indeed, such administrative pecuniary sanction is not so afflictive as to attribute to the offence at issue a substantially criminal nature. As a result the criminal law principle of favor rei is not applicable.
Regulation of conflicts of interest within asset management companies
Conflicts of interest must be adequately identified and managed by asset management companies by means of appropriate organisational measures so as to prevent them from seriously damaging one (or more) of the UCITS managed by such companies, since the mere indication of the above conflicts in the relevant register is not sufficient.
The so-called liability for (false) prospectus is extended also to auditors
In the field of financial intermediation, the breach of client information and proper execution of transactions duties may result either in (i) a pre-contract liability, should it occurs before or during the conclusion of the related contract, or (ii) a contractual liability, with consequent termination of the contract for default, if the relevant behavior was held in the execution of the framework agreement. It must be hence excluded the nullity of the said agreement, as well as the negotiating acts carried out beforehand. Moreover, in case the prospectus has as object a world-wide offer of financial instruments, the tort liability for false in prospectus may apply also to the auditing firm for violation of the rules governing the content of the prospectus itself.
Civil Court of Ancona, decision n. 331 of 20th February 2019.
Financial services/FinTech
Consob’s paper on marketplace lending
The marketplace lending, a form of alternative financing aimed at collecting funds from private individuals and entities through online platforms, is the topic of a paper recently published on Consob’s website, which includes:
- a classification of the phenomenon, with particular regard to digital platforms;
- an economic analysis thereof, starting from the main business models used by the above platforms; and
- a legal analysis of structure and functioning of the lending marketplaces.
Compliance
Legislative Decree no. 231/2001
The non-punishability for particular tenuousness of the predicate offence does not exclude the legal entity’s liability pursuant to Law no. 231/01
The possible declaratory of non-punishability of the offender for particular tenuousness of the fact does not affect the claim formulated against the legal entity, since the criteria that apply to that cause of non-punishability do not apply in respect of the liability pursuant to Law no. 231/01. In fact, the criminal offence of the individual and the administrative offence of the legal entity concern two illicit behaviours conceptually different from each others.
Data protection
The right to privacy as a right to be forgotten
The re-publication on the Web at after a significant period of time of a past news, originally widespread in the legitimate exercise of the right to report, is historiographic in nature, with the consequence that the data subject’s right to confidentiality and anonymity prevails, unless there is an actual and current interest of the collectivity to know about the main actors of the particular facts, due to their popularity or public role.
Joint Sections of the Court of Cassation, decision no. 19681 of 22nd July 2019.
Anti-money laundering
EU Commission’s communication on anti-money laundering and terrorist financing
A recent EU Commission communication (followed by four reports) has set out mandatory guidelines on combating money laundering and terrorist financing (“AML”). The after-said reports are concerned with:
- supranational risk assessment on AML;
- evaluation of the most recent AML cases in the financial sector;
- cooperation between the Financial Information Units of each EU Member State; and
- conditions and procedures for interconnecting the various centralised automated registers in place in each EU Member State in relation to bank accounts.
Bank of Italy on client’s adequate verification for AML purposes
In implementation of the IV Anti-Money Laundering Directive, as well as of the European Supervisory Authorities’s guidelines on simplified and strengthened adequate verification and risk assessment factors for money laundering linked to ongoing relationships and occasional transactions, the BoI has recently issued a provision regarding adequate verification of the clients, which will enter into application from 1st January 2020.
Application of the most favorable law in case of omitted reporting of suspicious operations
The Supreme Court has recently clarified that Article 69, paragraph 1, of the so-called Anti-Money Laundering Law (namely, Legislative Decree no. 231/2007, as amended; the “Law”) – pursuant to which the administrative AML offences committed prior to the entry into force of the Law are subject to the law in force at the time when the alleged violation was committed, if more favorable to the offender – applies to all sanctioning proceedings still pending upon entry into force of the Law, as well as to the subsequent judicial proceedings before the competent Court possibly introduced by challenging the sanctionary resolution adopted by the supervisory authority.
Capital Markets
Amendments to the Issuer’s Regulation in implementation of the Prospectus Regulation
Consob Regulation on Issuers has been recently amended by introducing more favourable rules for listed issuers and SMEs, among which:
- the abolition of contrary or repetitive provisions with respect to aspect already regulated by the Prospectus Regulation (no. 1129/2017);
- an ad hoc regime for securities admitted to negotiation on a regulated market and financial products other than securities; and
- a simplification of the prospectus’s contents.
Procedural law
Requisites for claiming compensation for non-economic damage in a class action
In order to claim compensation for alleged non-economic damages in a class action, the damages in question must have been caused to a whole class of consumers and not just to one of them. In related lawsuit, the plaintiff must indicate:
- the constitutional relevance of the rights allegedly breached;
- the need that the alleged violation exceeds a “reasonable” threshold of tolerance; and
- the non-trivial nature of the damages suffered (i.e. the latter cannot consist of mere disadvantages or inconveniences).