Until recently pension funds did not exist in Italy, because not all of the ministerial decrees contemplated by Legislative Decree No. 124 of April 21 1993 which introduced and regulated pension funds had been issued. Three decrees have recently been enacted, two by the Treasury and one by the Ministry of Labour, which now make pension funds fully operative in Italy.
Decree No. 673 issued by the Treasury on November 21 1996 (published in the Official Gazette on January 4 1997) sets forth rules of conduct, accounting separation principles and operational limits for companies managing pension funds. Under the Decree, managing companies shall act with skill, care and correctness in the interest of the pension funds, acquiring in advance from the pension fund any relevant information in order to carry out investments, duly inform the pension fund about the nature of investments and related risks and get proper information on the securities being managed. The management companies shall operate in the interest of the pension fund and in compliance with the rules on the negotiation of securities. Title on voting rights related to securities will remain with the pension fund.
For each pension fund, the managing company must keep the accounts in such a way that it is possible to identify investment sums and composition and undertakings arising from negotiations entered into but not yet settled. In addition, it must do whatever is necessary to maintain accounts for each fund separate from the company's accounts and other pension fund accounts, maintaining an internal organization to ensure full control over the activity. Proper measures to keep orderly records of the transactions for each managed fund must be adopted.
In addition, the managing company shall not enter into transactions which are not necessary or in the pension funds' interests. The managing companies may not assume liabilities on behalf of the relevant pension funds in an amount in excess of the assets managed. The managing companies shall not delegate to third parties the management unless such delegation is necessary in relation to the nature of the activity and, in any case, not without prior notice to the pension fund.
The second decree issued by the Treasury (not yet published in the Official Gazette) specifically identifies and lays down the criteria to be followed by the management on investments and transactions which are allowed, the limits to investment, and derivatives and conflicts of interest (in relation to investment within the group and other relevant situations).
The third Decree, issued by the Ministry of Labour and not yet published in the Official Gazette, supplies the missing details on the constitution and by-laws of pension funds.