Q&A: managing retail funds in Italy & More News Here

Retail funds

Available automobiles

What are the principle authorized automobiles used to arrange a retail fund? How are they shaped?

Retail funds might be structured as both collective investments in transferable securities (UCITS) or different funding funds (AIFs). While UCITS are open-ended funds, AIFs could also be established in the type of open-ended funds provided that they make investments in securities listed on a regulated market, financial institution deposits or, as much as 20 per cent of the fund’s property, securities not listed on a regulated market.  Considering the everyday operations of personal fairness funds, actual property funds and different funds investing in different markets, it’s right inferring that they will not be established as Italian open-ended AIFs.

Retail funds are normally arrange in a contractual type, however company constructions (SICAV, an funding firm with variable capital for open-ended funds, or SICAF, an funding firm with fastened capital for open-ended funds) are additionally obtainable.

Laws and laws

What are the important thing legal guidelines and different units of guidelines that govern retail funds?

The Bank of Italy supplies for particular funding coverage guidelines and diversification restrictions, to be included in the fund’s administration guidelines (or by-laws in case of company constructions) which might be topic to approval by the Bank of Italy.

Authorisation

Must retail funds be authorised or licensed to be established or marketed in your jurisdiction?

Retail funds are topic to authorisation by the Bank of Italy, which approves the fund’s governing paperwork. Marketing of retail funds is topic to authorisation by Consob.

Marketing

Who can market retail funds? To whom can they be marketed?

Retail funds might be marketed on the initiative of the supervisor or on behalf of the supervisor. When figuring out the advertising technique of a retail fund sponsors think about the constraints deriving from a public providing (requiring a prospectus authorized by the Italian Companies and Exchange Commission (Consob); in normal phrases, a minimal dedication of €100,000 forestall the provide as being certified as a public providing.   

Marketing to retail traders additionally requires a key data doc to be revealed on their managers’ web site to allow retail traders to grasp and examine the important thing options and dangers of the envisaged funding.

Managers and operators

Are there any particular necessities that apply to managers or operators of retail funds?

The Bank of Italy requires an authorisation for all managers. When making use of for the authorisation, a sponsor shall expressly point out their willingness to handle retail funds and description the precise preparations which were put in place to deal with the complexity of retail funds. If a supervisor has initially restricted its operations to non-retail funds, it must file a request of extension of its authorisation earlier than establishing and managing a retail fund.

Subject to a notification course of, EU asset managers can carry out the identical collective asset administration providers in Italy as they’re authorised to do underneath the European laws, each by a neighborhood department or on a cross-border foundation.

Investment and borrowing restrictions

What are the funding and borrowing restrictions on retail funds?

Retail funds are topic to the Bank of Italy provisions on limitation and diversification of danger.

UCITS and open-ended retail AIFs can enter right into a mortgage for as much as 10 per cent of the online asset worth of the fund. The length of the mortgage should be according to the purpose of the borrowing and can’t be excellent for greater than six months.

Closed-ended AIFs can enter right into a mortgage for as much as 10 per cent of the online asset worth of the AIF. The AIF can grant securities over its property to safe the mortgage acquired if that assure is a perform of or complementary to the funds’ operations.

Tax therapy

What is the tax therapy of retail funds? Are exemptions obtainable?

Italian tax guidelines think about all funds opaque (ie, non-transparent) entities, no matter their authorized type (ie, each contractual funds and company constructions), and deal with them as separate taxable individuals for Italian functions. To keep away from double taxation, funds are absolutely exempt from earnings taxes in respect of income and positive aspects realised in respect of their investments. An exemption applies additionally in respect of different direct taxes, such because the regional tax on productive actions, though funds established in company type stay topic to the regional tax on sure administration and subscription charges.

Asset safety

Must the portfolio of property of a retail fund be held by a separate native custodian? What laws are in place to guard the fund’s property?

The regulatory regime relevant to all capabilities requires the appointment of a custodian finishing up safekeeping and different capabilities in accordance with the relevant laws. Only Italian banks and funding corporations (or native branches of EU banks and funding corporations) might be authorised by the Bank of Italy to hold out depositary capabilities.

Governance

What are the principle governance necessities for a retail fund shaped in your jurisdiction?

Retail funds are enrolled in a register saved by the Bank of Italy, which grants an ISIN quantity for every class of fund’s pursuits. The register is obtainable on the Bank of Italy web site.

In addition to the accounting information stipulated by the Italian Civil Code for business corporations, the supervisor shall preserve a ledger recording the every day operations of difficulty and redemption, in addition to all different operations regarding the administration of the fund.

Reporting

What are the periodic reporting necessities for retail funds?

Retail funds are required to draft yearly and half-yearly stories on the administration of the fund, together with valuation of the fund’s property. Yearly stories are topic to certification by an auditing agency. A prospectus containing the items’ worth shall even be drafted with a frequency not less than equal to the one offered for the issuance and redemption of the fund’s pursuits.

Issue, switch and redemption of pursuits

Can the supervisor or operator place any restrictions on the problem, switch and redemption of pursuits in retail funds?

The fund paperwork shall permit the redemption of pursuits not less than on a 15-day foundation, as to UCITS funds, or on an annual foundation, as to open-ended retail funds.

There aren’t any relevant restrictions apart from these offered for by the fund’s administration guidelines, which may restrict the participation to sure classes of traders (eg, requiring a minimal dedication measurement).

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