The enactment of Decree of the Ministry of Economy and Finance no. 53 of April 2, 2015 (published in the Official Gazette no. 105 of 8 May 2015, hereinafter the “MEF Decree”) and the Circular of the Bank of Italy no. 288 of April 3, 2015, containing the Supervisory Instructions for Financial companies (published in the Official Gazette no. 134 of 12 June 2015, hereinafter the “Supervisory Instructions”) completed the reform of the rules governing the activities of financial companie , which began with Legislative Decree no. 141 of 2010.
In essence, the Italian legislator intended to reduce the activities subject to license only to the financing in any form, by excluding, for example, the participations acquisition activity and by providing for new exemptions.
The reform established a Single Register (Albo Unico) of financial companies, which are now all subject to stricter rules and requirements, so abolishing the distinction between financial companies listed in the General Register under art. 106 of the Italian Consolidated Banking Act (the “CBA”, Legislative Decree No. 385/1993) and those listed in the Special Register under art. 107 of the CBA.
The MEF Decree, which replaced the Ministerial Decree no. 29 of 2009, provides for a specific definition of activity of "granting of financing in any form", and in particular sets out the cases where such activity must be considered as addressed to the public and, as such, restricted to authorized entities.
Notably, the MEF Decree provides for a number of activities exempted from license, in addition to those already provided for by the abrogated Decree no. 29/2009, which have been substantially repeated in the MEF Decree (e.g. infra-group operations).
In particular, according to the MEF Decree:
- the following activities are not qualified as financial activities:
(iii). the purchase of VAT receivables related to the assignment of goods and services;
(iv). the purchase without recourse of receivables, by companies licensed to carry out extrajudicial credits recovery activities pursuant to art. 115 T.U.L.P.S., upon occurrence of certain specific conditions;
- the following activities are not considered to be carried out vis-à-vis the public (and therefore do not require any license):
(v). the issuing of guarantees, when the obligor and the beneficiary of the guarantee belong to the same group of the guarantor;
(vi). the granting of financing, in any form, by producers of goods and services (or by their affiliated companies) to entities - not belonging to the same group - involved in the production or distribution chain of such goods and services, upon occurrence of certain conditions;
(vii). the financing granted by the employer or by companies within the group exclusively to their employees or collaborators which belong to the company's organization, without applying interest or at interest rates which are lower than the market standards;
(viii). the granting of financing by companies set up for single transactions of funding and lending and with the purpose to be liquidated once the operation is completed, as long as it is consolidated into the balance-sheet of the parent company of a financial banking group or investment company.
The new Supervisory Instructions for Financial Companies extended the prudential supervision regime for banks to financial companies registered in the Single Register- with necessary adaptations and proportionally to the operational, dimensional and organizational features – by providing for rules similar to those applicable to financial companies registered in the Special Registry pursuant to art. 107 of CBA (before the reform).
For example, minimum capital thresholds are provided in order to enhance the stability and reliability of financial companies, which vary in proportion to their size. For instance, whilst for the generality of financial companies the Supervisory Instructions require a minimum capital of 2 million euro, a minimum capital requirement of 3 million euro applies to those financial companies carrying out also the issuing of guarentees activity (in addition to the granting of financing), due to the exposure to a higher risk. The minimum capital thresholds decrease for specific types of financial companies (e.g. cooperatives) which are exposed to a lower risk, depending on the relevant activity carried out.
In order to ensure the sound and prudent management of financial companies, the Supervisory Instructions introduced a new discipline of financial groups, besides providing for stricter requirements for the organizational structure and the internal controls system, as well as the godd repute and professional requirements for company's shareholders and officers. The new rules identify the composition of the group, the powers of the parent company, which acts as reference for the Bank of Italy for consolidated supervision purposes and the compliance by subsidiaries with regulatory requirements.
Furthermore the new discipline introduces a category of financial companies so called “minor” benefitting from less strict requirements, due to their reduced turnover (assets lower than 250 million euro) and the limitation of their financial activities to specific operations (securitization, granting of loans in the form of guarantees, servicing etc. are excluded).
Under Legislative Decree no. 141 of 2010, financial companies listed in the General Register and in the Special Register which have not applied for the authorization to be registered in the Single Register by the terms provided for thereunder, shall resolve upon their liquidation or the change of their corporate purpose, excluding any reference to the performance of restricted activities. In such case, such companies will continue to receive payment of the receivables deriving from the performance of the restricted activities previously carried out. This is possible provided that there are no novation or amendments to the underlying contractual conditions, including the economic ones, nor the substitution of the debtor as a consequence of the enforcement of the guarantees/securities, nor the early repayment or the postponement of the terms for payment.
The Bank of Italy on May 26, 2015 issued certain clarification notes about the timing for the registration of financial companies in the new Single Register and the compliance with the new law provisions.
Financial companies listed in the General Register pursuant to art. 106 of the CBA before the reform, included in the consolidated supervision and companies listed in the Special Register pursuant to art. 107 of the CBA before the reform, which intend to continue to carry out financial activities, shall file with the Bank of Italy a request for registration in the Single Register from July 11, 2015 and by no later than October 11, 2015.
Financial companies listed in the General Register pursuant to art. 106 of the CBA before the reform, which are not included in the consolidated supervision, which intend to continue to carry out financial activities, shall file with the Bank of Italy a request for registration in the Single Register by no later than three months before May 12, 2016 (i.e. February 12 2016).
Therefore, financial companies are allowed to operate until May 12, 2016 on the basis of their existing licenses, whilst they can continue to perform financial activities thereafter only if they have filed an application for registration in the Single Register within the prescribed terms.