Italian Law Decree no. 18 dated 14 February 2016 (the “Decree”), which entered into force on 16 February 2016, introduced, inter alia, new provisions in the Italian Legislative Decree No. 58 of 24 February 1998 (the “Italian Financial Act”) in respect of the “direct granting of credit” by European alternative investment funds (“EU AIFs”).

The Decree shall be converted into law within 60 days from its publication in the Official Gazette (i.e. within 60 days from 15 February 2016) and, in case of conversion, it is possible that some of the above provisions will be amended.

In order to facilitate the access to alternative finance by Italian companies, the new provisions allow EU AIFs (in addition to Italian AIFs) to invest in credits in favor of entities other than consumers, upon occurrence of certain conditions.

In particular, under the new art. 146-ter of the Italian Financial Act, EU AIFs are allowed to invest in credits provided that they are authorized to carry out such activity in their home member State, that they are closed-end funds and have a structure equivalent to that of Italian AIFs investing in credits, particularly in respect of participation rules. Moreover, it is requested that the provisions governing risk mitigation and diversification, including financial leverage limits, that are applicable to the relevant EU AIF under its home member State regulation are equivalent to those applicable to Italian AIFs investing in credits.

Under the Decree, a management company of EU AIFs (“AIFM”) intending to carry out the activity of investment in credits in Italy is required to send a prior notice to the Bank of Italy and it is then entitled to start its activity after sixty days , unless in the meantime the Bank of Italy has notified its denial.

In performing the said activity, AIFMs are subject to the transparency and conduct of business rules set forth under the Italian Consolidated Banking Act (“ICBA”) and the relevant imple- menting regulations, save for the ICBA provisions related to the out-of-court disputes resolution system.

It is not clear if the “investment in credit” includes only the granting of loans or also other forms of financing, e.g. the purchase of (performing and non performing) credits and e leasing.

Due to some inconsistencies in the wording of the Decree some authors even sustain that EU FIAs would rather be entitled to carry out only the - financial- activity of purchasing of credits, and not other financial activities.

Furthermore, assuming that EU FIAs are allowed to carry out the purchasing of credits activity, it is not clear if they could benefit of the more favorable regime provided for in case of “block assignments” of credits (cessione in blocco) according to art. 58 of the ICBA and the securitization Law No. 130/1999, as neither the Regulation on Collective Investment Management nor Law No. 130/1999 make express reference to assignments made in favor of EU FIAs.

The framework of the new provisions shall be completed following the conversion of the Decree into law and the issuing of the implementing regulations by the Bank of Italy, which is inter alia required to regulate the accession of EU AIFs to the Centrale dei Rischi (central credit information register), directly or through banks or financial intermediaries, as it is already provided for Italian AIFs.