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Italy

The Resolution of the Governor of the Bank of Italy dated November 28 2000 has introduced new provisions on the drafting of the fund rules of common investment funds, established in Italy pursuant to the European Communities Regulation 1989 (undertakings for collective investment in transferable securities – so-called harmonized funds).

The resolution aims to simplify the drafting of the rules so that their reading and understanding by any addressee (particularly investors, to whom a copy of the rules are to be delivered when they subscribe to the units in the fund) is made easier. The resolution provides for a standard form to be used for drafting the rules (unlike the situation existing under Legislative Decree No 58 of February 24 1998, that is to continue to apply to non-harmonized funds, which is more general). A major concern of the resolution is to avoid any repetition between the information provided for in the rules and those contained in any primary or secondary provisions of law applicable to the fund. In this light, the regulation provides that the rules must be drafted according to the following three sections:

  • the fund's identification card;
  • provisions relating to the characteristics of the fund; and
  • general clauses.

In particular, the identification card must contain the exact denomination of the fund, the name of the asset management company and of the custodian bank (other than of any company involved in the promotion of the fund), and the details relating to the nominal value of the fund units, and to its publication through national newspapers and any other means (including the internet). Regarding the second provision above, the rules must contain details of the investment policies of the fund, the proceeds and any distribution of dividends to the investors in the fund, the costs and expenses to be charged to such investors, and the subscription, redemption and conversion of the fund units. The final provision, regarding general clauses, aims to provide information relating to the participation in the fund. In this connection, it must include details of the payment procedures on subscription or purchase of the units, of the units and the relevant certificates, and of the asset management company. Further, the fund must detail the method for the calculation of the nominal value of the units and provide information concerning the reimbursement of the units, any amendment to the rules and the termination or winding-up of the fund.

The resolution allows a shorter term for the approval of the rules by the Bank of Italy (ie 20 days from receipt of the relevant request by the regulator) for those funds that have been drafted according to these rules without any derogation to the provisions contained under the final provision above. A term of 45 days is provided for any derogation to the general clauses (which in any case must be limited and exceptional) in the rules. In the absence of a written answer, the rules will be deemed to be approved when the above-mentioned terms elapse without the Bank of Italy rejecting them. In both cases – and this is the major innovation introduced by the resolution – such terms are significantly shorter than that provided under Legislative Decree No 58, which is four months from receipt of the relevant request by the Bank of Italy.

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