The Italian Transposition of AIFM Directive

Collective asset management was for long characterised by a lack of specific regulation at European level: in particular, for a long time the European Legislator addressed aspects representing a limited “slice” of the matter (as “harmonised” funds), without providing an organic regulation embracing the whole sector of asset management.  On this basis, Italy represented a fertile field for innovation and experimentation.  The flexibility at the European level granted relevant spaces of intervention for Member States.  In 2000, the Italian Legislator was the first to introduce a specific regulation regarding reserved and hedge funds, consequently legitimating their institution, marketing and management.  Italy represented an avant-garde laboratory for a sector as collective asset management, providing an example that soon after inspired other Member States to proceed in the same direction.  That said, the infamous crisis of 2008 brought to the surface a relevant number of problems connected (in particular) to hedge funds, leading the sector to an evident collapse: lack of liquidity, high complexity for (event expert) investors and misselling of products.  These factors indelibly affected investors’ faith, causing a drastic contraction of the hedge funds industry and, in most cases, the default of asset management companies.  This is particularly evident in a market such as Italy which is historically more inclined to risk aversion.
 
On this basis, the Legislator had to “collect” the impulses coming from the market, and respond through a proper reaction: the AIFM (Alternative Investment Fund Managers) project, culminated with Directive 2011/61/EU, introduced a new European regulation for the asset management sector, in addition to UCITS regulation.  In particular, the scope of the AIFM Directive is to regulate the activity of alternative investment fund managers, where “alternative investment funds” (AIF) are defined as collective investment undertakings that do not require authorisation pursuant to Article 5 of UCITS IV Directive (2009/65/EC).
 
The transposition of AIFM Directive in the Italian legal system will deeply influence and affect the national regulation regarding asset management: the recently published consultation document, that should soon become enforceable law, shows profound changes in our Consolidated Law on Finance (“Testo Unico della Finanza”, so-called TUF), the most evident of which is probably the great fracture that will divide the collective investment undertakings’ market: on the one hand, those disciplined by UCITS Directive, on the other hand, the residual category of “alternative funds”.  This dualism involves also the subjects, since – as said – the AIFM Directive’s scope is to regulate the specific category of AIF managers, in opposition to managers of UCITS funds.  In any case, it must be noted that this distinction will not result in a “blocking” effect, since the authorisation to act as UCITS fund manager and the authorisation to act as AIF manager do not exclude one another: this means that the dualism is merely apparent, since a determined subject – if obtained all the required authorisations – will be able to act both as UCITS and AIF manager, with the consequent possibility to establish and manage both kinds of funds.
 
The innovation granted by AIFM Directive in the Italian system, though, will not be limited to the division between UCITS funds and “alternative investment funds” or to the different authorisation regime for UCITS and AIF managers; rather, the relevant renewed dispositions of TUF will “go beyond” the European level, also granting to non-UE subjects (i.e. without registered office in a Member State) the possibility – for instance – to manage and market, in Italy, Italian alternative investment funds.
 
Besides, the transposition of AIFM Directive will determine a further enrichment of collective investment undertakings categories: in addition to SICAVs (“società di investimento a capitale variabile”, literally investment companies with variable capital), the renewed TUF regulation – following a consolidated practice of other Member States – will also include a new category of subjects, whose success in the Italian market will be tested in the next years: SICAFs, i.e. investment companies with fixed capital.
 
The process of “expansion” will also involve the spectrum of activities carried out by asset management companies: in fact, as a result of the transposition of AIFM Directive, asset management companies, if authorised as AIF managers, in addition to all the other services and activities listed at article 33 of TUF will be able to provide reception and transmission of orders: this represents a very relevant innovation, since it grants a further possibility for asset management companies to act in the sector of investment services and activities, increasing the level of competition with banks and investment firms.
 
The renewed TUF will also provide important changes in relation to the activity of the “depositary”: firstly, the activity will be no more reserved to banks, but also investment firms (Italy-based or Italian branches of EU ones) will be in the condition to act as depositary, if in possess of all the needed requirements and once authorised by the Bank of Italy.  Besides, the new TUF regulation will provide specific dispositions regarding the liability of the depositary.  Once again, the aim of the Legislator is to address one of the recurring problems that, during the last years, often affected the transparency of the market: in this case, the practice to create long chains of sub-custodians, resulting in the difficulty to clearly identify the final and effective custodian of the undertakings’ goods.  In this sense, article 49 of TUF will establish that the depositary remains liable towards the undertakings’ manager and investors, for any damage resulting from failure to comply with its obligations.  Besides, the depositary liability remains unaffected even in case of sub-deposit, unless otherwise provided by a specific contract between the undertaking manager, the depositary and the sub-depositary.
 
These are some of the measures that will contribute to change the face of asset management regulation included in TUF.  Still, the picture is yet to be completed, since the transposition of AIFM Directive will undoubtedly influence the Italian regulation not only at the primary level, but also at the secondary level (issued by the Bank of Italy and Consob) it will be very interesting to see how this process will be faced by Regulators, and if it will result in the creation of a substantially satisfying playing field, in terms of competition, transparency and investors’ protection.  In fact, just an analysis of the whole legal framework (primary and secondary) will permit to understand the evolution of collective asset management in the near future.
 
Prof. Filippo Annunziata is an associated professor of Financial Institution and Markets Law at University Bocconi (Milan) and author of a wide list of publications, including two monographs regarding stock markets and financial markets in general.
 
His main areas of specialization include commercial, corporate, banking, financial and insurance law.
He has acquired specific expertise in collective asset management – with particular regard to alternative investments, private equity and real estate –, financial and banking services.
 
He provides assistance to listed issuers, also with reference to themes linked to issuing and listing proceedings.  His practise includes insolvency proceedings and crisis-management procedures for financial and non-financial entities.
 
f.annunziata@acfirm.it
 
Avv. Andrea Conso was admitted to the Bar in 2005, he worked as legal intern in many important banks and financial companies for 10 years.  Its main areas of specialization include commercial, corporate, banking, financial and insurance law, collective asset management, investment/banking services and payment services, even related to the management and issue of electronic money.
 
He assists its clients in insolvency proceedings and crisis-management procedures for financial and non-financial entities; civil, commercial and administrative litigation; disciplinary and penalty proceedings before the Supervisory Authorities, related to the provision of investment, banking and insurance services.
 
a.conso@acfirm.it
 
Annunziata & Conso
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