This content is from: Local Insights


On July 25 1996 the Bank of Italy introduced a number of amendments to the Regulations enacted on May 20 1994 to implement Law No. 86/1994 on real estate closed investment funds.

The changes are in part designed to facilitate the disposal of real estate properties held by the Italian state.

Participations in real estate closed investment funds may now be made in the form of cash contributions or the transfer of real estate properties in exchange for units of the fund.

It is expressly contemplated in the Financial Law for 1997 now in the process of approval that the Treasury will sponsor the creation of one or more managing companies of real estate closed investment funds, acquiring direct or indirect participations in them to be later dismissed and receiving in exchange special securities. Such special securities could be subsequently used in partial satisfaction of tax claims.

In addition, the trading of units of real estate closed investment funds may now be delegated from the managing companies of the funds to Italian as well as EU investment companies and banks provided certain conditions are met.

In particular such investment companies and banks:

  • shall be authorized to exercise the activity of trading in Italy on their own account in compliance with the ISD Directive and, in addition, shall actually carry out such activity in a professional manner;
  • shall have a reserve capital of at least L50 billion (US$32.5 million) if investment companies and of L200 billion if banks; and
  • shall have an adequate organization for carrying out the delegated activity in an efficient manner.

The Bank of Italy is required to approve the text of the agreement regulating the relationship between the management companies of the real estate closed investment funds and such authorized entities.

The Bank of Italy requires, in addition to the text of the agreement, from Italian investment companies and banks, a confirmation of their assets, while EU entities shall be required to send the Bank of Italy a statement by the respective home country authority certifying their asset position and the adequacy of their organization.

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