Cross-border distribution of collective investment undertakings: implementation in Italy of EU rules

On 15 July 2021, the Italian Council of Ministers approved, in preliminary examination, a legislative decree introducing rules to adapt national legislation to EU rules on cross-border distribution of collective investment undertakings.

The draft decree follows the issuance of Directive (EU) 2019/1160 and Regulation (EU) 2019/1156, which regulate the cross-border distribution of collective investment undertakings in order to remove regulatory barriers that limit the offer of undertakings between different EU States, with the aim of reaching a greater level of harmonisation at EU level. Regulation (EU) 2019/1156 applies from 1 August 2019, with the exception of Article 4, paragraphs 1 to 5, on the requirements for marketing communication, Article 5, paragraphs 1 and 2, on the publication of information on websites of the competent authorities, and articles 15 and 16, on the subject of "pre-marketing", which apply from 2 August 2021. The transposition deadline provided for by the Directive is 2 August 2021.

Removing inefficiencies in the functioning of the single market for investment undertakings should reduce the costs and consequently accelerate the growth of cross-border distribution in the EU. Indeed, most of the collective investment undertakings are sold in the home country of establishment and cross-border distribution is still too limited.

Among other things, by the draft decree Legislative Decree No. 58 of 1998 (the Consolidated Financial Act) would be amended in order to provide that:

• the Bank of Italy and Consob, according to their respective powers, are appointed as competent national authorities pursuant to Regulation (EU) 2019/1156 for the publication and management on their websites of the information provided by Article 5, paragraph 1 of Regulation (EU) 2019/1156;
• the Bank of Italy is appointed as competent authority to set out rules for communicating the interruption of the offer of Italian UCITS in other EU member States;
• the notion of 'pre-marketing' is introduced. It consists of providing information and communications on investment strategies or ideas by an asset management company or an alternative investment fund manager to potential professional investors, resident or having their registered office in the territory of the EU, in order to sound out their interest in an Italian or EU AIF or a sub-fund not yet established or already established but for which the notification procedure has not yet been started pursuant to Article 43, paragraphs 2 and 8, in the Member State where potential investors reside or have their registered office. The draft decree clarifies that pre-marketing does not constitute an offer to the public;
• administrative sanctions under the Consolidated Financial Act are extended to cover violations of provisions under the draft decree.

Next steps

The draft legislative decree approved in preliminary examination will follow the ordinary legislative procedure. It will be subject to final examination and is likely to be amended and integrated, before its final publication in the Official Gazette and its entry into force.

Authored by Jeffrey Greenbaum and Claudia Colomba.