Year in Review - Italian Law in 2016

129 Regulation: On 1 October, certain post-issuance reporting requirements (segnalazioni consuntive) in connection with the issue and offering of certain financial instruments in Italy or by Italian resident issuers became applicable pursuant to a regulation issued by the Bank of Italy implementing article 129 of the Consolidated Banking Act. The 129 Regulation imposes reporting obligations on entities distributing/placing in Italy financial instruments issued by non-Italian resident issuers (above). The post-issuance reporting requirements will apply from 1 January 2017 although information relating to relevant financial instruments placed or offered in the period between 1 October 2016 and 31 December 2016 should be filed by 20 January 2017.

Solvency II: Following the implementation of Directive 2009/138 (Solvency II) with the Legislative Decree 12 May 2015, no. 74, with reference to the implementation of EIOPA Guidelines, IVASS (the Italian Insurance Supervisory Authority) issued several regulations’. On 28 June, two regulations came into force: one concerning investments and assets as coverage of technical reserves (no. 24); the other concerning supervision over insurance groups (no. 22). On 29 November, another two regulations came into force: one on the applicability of reinsurance agreements to the underwriting risk in insurance damages contracts (no. 31); the other on the assessment of risk and solvency (no. 32).

UCITS V: On 4 June, the Legislative Decree, no. 71, came into force, implementing Directive 2014/91/EU (UCITS V), followed by the Bank of Italy’s implementation Act of 23 December. Both introduce several innovations that fully align the Italian regime to the EU framework. Highlights: (i) depositary’s obligations and potential conflicts of interest of the latter; (ii) remuneration policies for fund managers (in order to promote sound risk management in line with the UCITS risk profile); (iii) sanctioning regime.

Implementation of the amended Transparency Directive: On 18 March, the decree implementing the amended Transparency Directive (Legislative Decree 15 February 2016 no. 25) came into force. Highlights: (i) increase of the threshold - from 2% to 3% of the issuer’s share capital – triggering the obligation to notify significant shareholdings and (ii) extension to three months of the term for the publication of the half-yearly financial report and removal of the obligation for listed issuers to publish an interim management statement. Read more…

CRD IV: On 24 February, amendments to the CONSOB Regulation on the sanctions’ procedure (Regulation no. 18750 of 19 December 2013) were made to resolution no. 19521, in order to implement the amendments to the Italian Finance Act introduced in May 2015 following the adoption of CRD IV. In the same vein, on 3 May, amendments to the Bank of Italy rules on sanctions issued on 18 December 2012 were enacted. Highlights: (i) provisions relating to the new power granted to CONSOB the Bank of Italy to issue directives in order to terminate violations; (ii) criteria for the calculation of the turnover of banks and other companies in order to determine the maximum measure of the applicable sanction; (iii) the right for the sanctioned person to state his case.

The guarantee scheme to encourage Italian banks to deal with their NPLs: With a view to encouraging Italian banks to dispose of their NPL portfolios and reduce the bid-offer spread, the Italian government introduced a guarantee issued by the Italian State. The guarantee scheme contemplates a mechanism whereby the Italian State issues a financial guarantee with respect to the payment of interest and repayment of principal on the senior tranche of the asset-backed securities issued by the relevant securitisation SPV. The ability of the State to issue such guarantees will be subject to conditions indicated in the Law Decree no. 18/2016 (for further details see below). Read more

Direct lending in Italy: On 14 February, the Italian government issued a Law Decree (no.18/2016), introducing new provisions according to which Italian and EU AIFs are authorised to lend directly to Italian borrowers (excluding consumers). Implementing provisions are included in the Bank of Italy’s Act of 23 December 2016, which set out (i) the application process (in terms of contents and timing) to be followed by an AIFM in order to obtain the “passport” to perform direct lending activities in Italy and (ii) certain ongoing reporting requirements to the Bank of Italy. Read more

Compounding of interest in banking transactions: Law no. 49/2016 amended article 120, paragraph 2, of the Italian Banking Act relating to the so called compounding of interest, establishing that: (i) in relation to bank accounts or payment accounts transactions, the same interest periods shall apply for interest owed by the client to the bank as for interest owed by the bank to the client and this shall be at least equal to one year; and (ii) accrued debtors’ interest, including in relation to credit card facilities, cannot generate further interest, save for default interest and shall be calculated exclusively on the principal component of the debt. Read more

The new Italian floating charge, repossession agreement and further measures to facilitate credit recovery: On 3 May, the Italian government issued the so called “Save Banks” Decree (Law Decree no. 59/2016), which (i) introduced a new type of pledge, without dispossession of the debtor; (ii) allowed lenders and borrowers (who are companies or entrepreneurs) to enter into a repossession agreement; (iii) introduced a new electronic register where all the real estate enforcement proceedings, insolvency and pre-insolvency procedures will have to be filed. Read more

Public procurement: On 28 January, the Italian Parliament formally approved Law no. 11 which authorises the Italian Government to transpose the new European procurement package (i.e., Directive 2014/23/EC on the awarding of concession contracts, Directive 2014/24/EC on the awarding of public contracts of works, services and supplies and Directive 2014/25/EC on procurement by entities operating in the water, energy, transport and postal services sectors). Read more…

New procedures for resignation and mutual termination: As of 12 March 2016, in order to become effective, resignations and mutual termination of employment shall be made electronically through dedicated forms (which are available on the Ministry of Labour’s website) to be sent by the employee to both the employer and to the competent labour office. In addition, the employees may revoke (electronically) resignations or mutual terminations within seven days of the date the electronic forms were sent.

Italian LBOS: Guidelines from the Tax Authorities shed light on several tax issues: On 30 March, the Italian Revenue Agency issued detailed guidelines on certain significant and long-debated tax issues affecting Italian LBO and MLBO transactions (the “Guidelines”). The Guidelines are consistent with the recent efforts by the Italian government to promote a more favourable environment for international and domestic investors by, inter alia, removing uncertainties and clarifying the rules applicable to this kind of document. Read more

Update of the Italian white list: With the publication of a highly anticipated ministerial decree, the list of jurisdictions allowing a satisfactory exchange of tax information with the Italian administration – the so-called “white list” – has been updated with more than 50 States and territories. The new list includes those jurisdictions which in the last few years have agreed, with Italy, a treaty or a tax information exchange agreement, but which so far had not formally been recognised by the tax authorities as “co-operative” jurisdictions. Read more

Year to come - Italian Law in 2017

AMLD IV Directive: The Ministry of Economy and Finances has launched a public consultation on the draft of the Legislative Decree for implementing the Directive (EU) 2015/849 of the European Parliament and of the Council (AMLD IV Directive), in order to align Italian anti-money laundering legislation (Legislative Decree 21 November 2007, no. 231, and subsequent amendments) to the EU framework. In particular, the objective of the consultation is to acquire the first guidelines and observations from associations representing the sectors obliged to observe anti-money laundering provisions. The consultation closed on 20 December 2016. The Legislative Decree will be enacted in the first half of 2017.

Solvency II: Following the implementation of Directive 2009/138 (Solvency II) with the Legislative Decree 12 May 2015, no. 74, with reference to the implementation of EIOPA Guidelines, IVASS (the Italian Insurance Supervisory Authority) has launched a public consultation on public reporting (document no. 12/2016) in order to enact an implementing regulation. Public consultation will close on 16 January 2017.

MIFID II: On 20 June 2016, the Ministry of Economy and Finances published the outcome of the public consultation launched for the implementation of Directive 2014/65/EU and Regulation (EU) no. 600/2014 (MiFID II and MiFIR). Even though the implementation should have occured by 3 July 2016, due to the general one-year delay for the application of the MiFID II/MiFIR package, the latter is expected in early 2017, even though the majority of the new rules will not enter into force before 2018.

PRIIPs: On 13 December 2016, the Legislative Decree, no. 224, was enacted, which, by amending the Italian Consolidated Finance Act, aligns Italian law to Regulation (EU) no. 1286/2014 concerning documents containing key information for “packaged retail investment products” and “insurance-based investment products” (collectively, PRIIPs). Of particular interest are the provisions related to: (i) key information of products; (ii) market monitoring and product intervention powers for CONSOB and IVASS; (iii) procedures of complaint and redress for investors; (iv) administrative penalties towards natural and legal persons for breaches of the Regulation; and (v) whistleblowing procedures. As the Regulation, following a Commission decision in November 2016, will come into force on 1 January 2018, in turn the entry into force of the Legislative Decree will also be effective as of 2018.

Remuneration Guidelines for Institutions: As of 1 January 2017, the new EBA Guidelines, 21 December 2015, no. 22, on sound remuneration policies implementing some provisions of the CRD IV and the CRR shall come into force. The revision results in a fundamental change in the determination of fixed and variable remuneration and sets out detailed requirements on permissibility of severance pay packages. A regulation of the Bank of Italy implementing the above Guidelines is therefore expected in 2017.

CRD IV: The Bank of Italy launched a public consultation on the discipline of the reserve capital preservation for banks and SIM pursuant to CRD IV provisions. In particular, the Bank of Italy announces its intention to align transitional provisions on the capital conservation reserves to the reserve ratios provided for under the CRD IV directive. The consultation closed on 28 September 2016. In early 2017, a regulation of implementation of the Bank of Italy is expected.

Implementation of the amended Transaparency Directive Disclosure by listed issuers of additional periodical financial information: From 2 January 2017, new provisions on the disclosure by listed issuers of additional periodical financial information are applicable pursuant to a new provision introduced in the CONSOB Regulation no. 11971/1999 (Issuers’ Regulation) on 26 October 2016. The obligation to publish an interim management statement was removed from the Italian Finance Act further to the implementation of the amended Transparency Directive but the Italian competent authority (CONSOB) was granted the power to reintroduce such obligation where certain conditions are met. CONSOB decided to refer to the listed issuers the decision to publish such additional financial information, therefore Italian listed companies that voluntarily decide to disclose periodical financial information in addition to the annual and the half-yearly financial report shall comply with specific principles and criteria.

Insolvency Reform: In January 2015, the Ministry of Justice appointed an expert commission to study a reform of the bankruptcy law in order to update and harmonise both liquidation and rescue proceedings. The draft of the new law was finalised at the beginning of December. The Parliament is now entitled to apply the law in order to give the government guidelines for the adoption of one or more legislative decrees (LIA).

Damages Directive: The Italian Parliament is currently examining the draft Legislative Decree implementing EU Directive 2014/104 of 26 November 2014 on antitrust damages actions. The deadline for the implementation of the Directive was 27 December 2016, however, the final approval of the draft Legislative Decree is likely to occur at the beginning of 2017.

Annual Competition Law: The annual competition law is currently under examination by the parliamentary committees of the Senate and was expected to be adopted at the beginning of 2016. It contains provisions aimed at rendering certain Italian sectors (e.g. banking, insurance, telecommunication and energy) more competitive. It is not clear whether it will be approved in the near future, due to the political situation in Italy.

Proposed new rules regarding “smart working” and whistleblowing: The Italian government is currently discussing a draft law about “smart working”. “Smart working” provides, in brief, that: (i) employees may work remotely, using adequate IT equipment; (ii) a specific work station is not required for working remotely; (iii) there must be a written agreement on “smart working” with the employee concerned; and (iv) employers are required, at least once a year, to provide employees with a specific written note on health and safety requirements. The proposal is still under discussion and is expected to be approved by Parliament within the next few months. The Italian government is currently discussing a draft law which will introduce whistle-blowers’ protection in the private sector. Based on the draft law, the employees are protected from dismissals, disciplinary actions or any form of discrimination/retaliation as a consequence of having flagged any unlawful practices of the company to the competent authorities.

Dismissal cost: Starting from 1 January 2017, in any case of dismissal (both collective and individual) the employer shall pay to the state social security authority (Istituto Nazionale di Previdenza Sociale (INPS)) a “dismissal ticket” (ticket licenziamento). Such contribution will be equal to an amount comprised between EUR 489 and EUR 1,469, depending on the employee’s length of service, per each dismissed employee.

New advanced pension (anticipo pensionistico – Ape): Starting from 1 May 2017, employees who are close to pension age will have the possibility to anticipate the pension period, taking out a loan to be repaid over the following 20 years and using such loan as anticipated pension until they are able to access the state pension fund. The loan will be in the form of a monthly indemnity, equal to the pension benefit that the worker will receive during his/her pension period.