Febbraio 2017 · solo inglese

Direct lending and purchase of claims in Italy by EU AIFs – Bank of Italy Regulation

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DIRECT LENDING AND PURCHASE OF CLAIMS IN ITALY BY EU AIFS – BANK OF ITALY REGULATION

1. INTRODUCTION


The purpose of this newsletter is to provide a brief summary of the long-awaited Bank of Italy implementing measure dated 23 December 2016, aimed at amending the Bank of Italy regulation concerning collective asset management (the “Regulation”) in order to introduce provisions for promoting new corporate lending solutions, according to Articles 46-ter and 46-quater of Legislative Decree no. 58 dated 24 February 1998 (the "Italian Financial Act") as last amended, and in particular:

a. Article 46-ter, allowing EU alternative investment funds (AIFs) to invest in loans extended to Italian borrowers different from consumers, in compliance with specific conditions;

b. Article 46-quater, providing for the application to such loans of the provisions on: i) transparency and terms governing relationships with customers pursuant to Legislative Decree No. 385 dated 1 September 1993 (the “Italian Banking Act”); ii) administrative sanctions pursuant to the Italian Banking Act, without prejudice to the provisions set forth under the Italian Financial Act.

The abovementioned provisions apply to both Italian and EU AIFs). Italian and EU AIFs are defined by Directive No. 2011/61/UE (the “Alternative Investment Fund Managers Directive” or “AIFMD”) as “any collective investment undertaking, including investment compartments thereof, which raises capital from a number of investors with a view to investing it in accordance with a defined investment policy for the benefit of those investors and which does not require authorization pursuant to Article 5 of directive no. 2009/65/EC”.

1.1 Article 46-ter of the Italian Financial Act

Article 46-ter allows EU AIFs to invest1 in loans to Italian borrowers different from consumers, under the following conditions:

i. the EU AIF is duly authorised by its home country Authority to invest in loans, including loans made by the EU AIF;

ii. the EU AIF must be a closed-end fund and its operational scheme, with particular reference to the participation process in the EU AIF, is the same as the operational scheme of an Italian AIF investing in loans;

iii. risk management provisions applicable to the EU AIF pursuant to its home Member State law and regulation, including the provisions related to leverage limits, are equivalent to those applicable to Italian AIFs allowed to invest in loans. The fulfilment of such equivalence condition can be verified based on the EU AIF by-laws or regulation, provided that the competent Authority of the EU AIFs home Member State ensures the proper application of said provisions.

Paragraph 2 of Article 46-ter points out that EU AIF managers intending to invest in loans granted to Italian borrowers, are required to send a prior communication to the Bank of Italy in order to inform the Italian Authority of their intention to operate in Italy (see paragraph 2.2 below for the relevant procedure).
In order to ensure sound and prudent management, the Bank of Italy may deem necessary the participation of the EU AIFs at the “Central Credit Register” (Centrale dei Rischi), also through banks or a financial intermediary duly authorized to operate in Italy.

2. THE NEW REGULATORY FRAMEWORK FOR EU AIFS INVESTING IN LOANS IN ITALY DEFINED BY THE BANK OF ITALY

The regulatory framework resulting from the revised Regulation provisions: i) reaffirms the required conditions in order to carry out lending by EU AIFs in Italy as already defined by Article 46-ter of the Italian Financial Act; ii) specifies the requirements of the prior communication procedure through which the EU AIFs are required to inform the Bank of Italy of their intention to start offering loans in Italy.

2.1 The conditions required to commence direct lending in Italy

The new chapter V of the Regulation (paragraph 2) merely refers to all the conditions already provided for in Article 46-ter of the Italian Financial Act previously described (please refer to paragraph 1.1 above).

2.2 The prior communication procedure

According to paragraph 2.2 of the Regulation, EU AIFs managers (“EU AIFMs”) intending to offer loans in favour of Italian borrowers, are required to send a prior communication to the Bank of Italy for each single fund concerned, at least 60 days before starting the operation in Italy, containing the following information and data:

• name, registered office and directorate-general of the EU AIFM;
• name of the EU AIF or the relevant fund’s compartment which is intended to operate in Italy;
• personal s and the legal capacity of the person who signs the communication;
• list of the documents attached to the communication.

Further documents listed in the Regulation, to be drafted alternatively in Italian or in English, must be submitted to the Bank of Italy together with the communication (said list includes, inter alia, certain certifications issued respectively by the EU AIFM and EU AIF home country Authorities; the EU AIFs’ regulation or by laws, a copy of the EU AIFM’s by laws; the latest annual report).

An EU AIF already authorised to invest in loans in Italy intending to start the operations with respect to a different fund’s compartment, is not required to re-submit information or data regarding the EU AIFM previously communicated to the Bank of Italy.

Once the documentation has been reviewed and the necessary additions or amendments have been successful carried out, the Bank of Italy informs the entity concerned.

Within 60 days of receiving the communication, the Bank of Italy may prohibit the fund to invest in loans if the conditions set out in Article 46-ter are not met. Otherwise, in case the Bank of Italy, within said period, does not prohibit the investment in loans, the EU AIFM is entitled to start lending in Italy.

3. OTHER PROVISIONS

The EU AIFM is required to provide the Bank of Italy with the financial report (rendiconto), and to promptly inform the Italian Authority in relation to any amendments to the relevant information and data previously provided. If any of the conditions set forth under Article 46-ter are not met as a result of the amendments, the Bank of Italy may prohibit the EU AIF to invest in loans.

1The investment in loans includes both direct lending and purchase of claims.


DISCLAIMER

La presente Newsletter ha il solo scopo di fornire informazioni di carattere generale. Di conseguenza, non costituisce un parere legale né può in alcun modo considerarsi come sostitutivo di una consulenza legale specifica.