New procedures in Italian dematerialised notes
The rules on financial instruments admitted to a central depository in dematerialised form are laid down in different pieces of legislation, including articles 83-bis onwards of the Financial Consolidated Act and the Bank of Italy/CONSOB regulation of February 22 2008 (the 2008 Regulation).
The issue of dematerialised financial instruments (which include both shares and notes) entered into a central depository (in Italy, Monte Titoli) is very frequent in the Italian financial market.
The 2008 Regulation has been recently amended by the Bank of Italy/CONSOB regulation of October 22 2013 (the 2013 Regulation) whose provisions enter into force on April 15 2014.
The new article 26-bis of the 2008 Regulation, introduced by the 2013 Regulation and applicable from April 15 2014, allows issuers of notes admitted to the central depository in dematerialised form (the dematerialised notes) to proceed with the identification of the holders of the relevant dematerialised notes (the noteholders).
According to article 26-bis, issuers of dematerialised notes may, at any time and at their own expense, request – through the central depository – the intermediaries holding the accounts on which the relevant dematerialised notes are recorded to provide data identifying the noteholders (and the number of dematerialised notes recorded on their accounts).
Should the issue of dematerialised notes be subject to Italian law, issuers may request the data identifying the noteholders provided that they are allowed to do so under the terms and conditions of the notes.
In this case, issuers are obliged to proceed with the identification if so requested by the noteholders' meeting or by noteholders representing a certain percentage provided by the law (with the relevant expenses shared between the issuer and the noteholders, according to the criteria set out in the terms and conditions of the notes).
In the event that the relevant dematerialised notes are admitted to negotiation on the markets, issuers have to publish a notice regarding the decision to proceed with the identification of noteholders and the relevant reasons.
The communication of data identifying the noteholders under article 26-bis shall be sent to the issuer by the intermediary participating to a central depository, within 20 trading days from the relevant request.
Article 26-bis provides also an alternative procedure for the identification of noteholders (which is applicable also to shareholders) according to which issuers may request: (i) the central depository to provide data identifying the intermediaries which hold the accounts on which the relevant dematerialised notes (or dematerialised shares, as the case may be) are recorded; (ii) the intermediaries to provide data identifying the persons holding the accounts on which the relevant dematerialised notes (or dematerialised shares, as the case may be) are recorded.
In any case, noteholders may expressly prohibit the communication of their data, preventing issuers from identifying them.
The identification of noteholders should make it easier for issuers to benefit from the provision of Italian law according to which the limits to the deductibility of interest paid on non-listed notes do not apply, provided that such notes are held (up until the maturity of the notes) by qualified investors meeting certain criteria set out by the law.
The application of such provision is, in fact, dependent upon the capability of the relevant issuer to identify at any time the holders of the notes.
In addition, the identification of noteholders may also be necessary whenever issuers intend to submit to them a proposal for the re-negotiation or restructuring of the relevant transaction.
Susanna Beltramo and Bruno Zerbini