Italy

Summary of private placement provisions for fund interests (if applicable)

Italian laws and regulations do not provide for a definition of “private placement”.

The term “private placement” is commonly used to indicate a restricted offer of financial products to professional investors that is exempted from the duty to publish a prospectus.

In particular, according to Article 100 of the Italian Consolidated Financial Act (Legislative Decree no. 58 / 1998, “CFA”), as implemented by Article 34-ter of the Issuers Regulation no. 11971 / 1999 issued by Consob (the Italian Securities Market Supervisory Authority), the offer of financial products exclusively to professional investors is exempted from the duty to publish a prospectus.

The definition of professional investors is set out under Article 6, para. 2-quinquies of the CFA and Attachment 3 of Consob Intermediaries Regulation no. 20307 / 2018, whereby professional investors include:

• professional investors by operation of law, i.e.:
  • Italian and foreign entities authorised and regulated to operate in financial markets (e.g. banks, investment companies, insurances, pension funds etc.);
  • large companies meeting certain requirements;
  • institutional investors whose main activity is investment in financial instruments;
• professional investors on request, provided that certain criteria and procedures are met (in this case the offeror is in any case obliged to assess whether the investor is able to make informed investment decisions and to understand the risks thereof); and
• public professional investors, subject to certain procedures and requirements.

The AIFMD has been implemented in Italy by Legislative Decree n. 44 of 4 March 2014, which amended the provisions of the CFA and became effective from 9 April 2014.

The marketing of AIFs to professional investors (and to the investors identified under the Ministry Regulation enacted under Article 39 of the CFA) shall be preceded by the prior notification to Consob under Article 43 of the CFA, requiring:

• the prior notification to Consob and an assessment by the Bank of Italy of the adequacy of the AIFMs to manage the relevant AIF, in order to market to professional investors:
  1. Italian AIFs reserved to professional investors; and
  2. EU and Non-EU AIFs managed by either Italian SGRs (asset management companies) or Non-EU AIFMs authorised in Italy;
• the prior notification to Consob by the home State authority in order to market to professional investors:
  1. Italian AIFs (either reserved or not reserved to professional investors); and
  2. EU and Non-EU AIFs managed by either EU AIFMs or Non-EU AIFMs authorised in an EU country other than Italy.

The above notification duties also apply to Italian, EU and Non-EU AIFs managing their own assets.

Other forms of possible placement options for fund interests outside fund regulations

Fund interests can be placed outside fund regulations through the reverse solicitation mechanism (i.e. following a genuine unsolicited request by the investor).

Certain requirements must be met if the (unsolicited) request is made by a bank/ investment company when providing a portfolio management service to Italian clients.

Consequences of non-compliance with placement regimes for fund interests

If there is a breach of the private placement provisions an agreement may be declared null and void for violation of mandatory provisions according to Article 1419 of the Italian Civil Code and the breaching party may have to refund the relevant sums invested by the customers plus any damages and interest.

According to Article 190 of the CFA if offers of fund interests in Italy are carried out in breach of the procedure set out under Article 42 and Article 43 of the CFA, an administrative sanction from EUR 30,000 up to the higher of 
(i) EUR 5,000,000, and (ii) 10% of the offeror’s turnover can be applied to the offeror. Furthermore, according to Article 190-bis of the CFA, an administrative sanction from EUR 5,000 to EUR 5,000,000 can also be applied to representatives, directors, auditors and employees of the offeror, when the breach is caused by a violation of their duties, upon occurrence of specific circumstances (e.g. their conduct has caused damage to the investors or to the correct functioning of the securities market or has materially affected the offeror’s organisation or risk profile).

Private placement rules for non-fund investments available

Financial products are generally subject to private placement opportunities, for example, tradeable securities, money market instruments, options, futures, swaps and other derivative contracts. These are subject to the private placement provisions when the exemptions from the duty to publish a prospectus apply.