6.17 Article 37 of the TUF authorized the Minister of Economy and Finance to make TUF implementation rules by Ministerial Decree, or ‘DM’. Accordingly, DM No 228 of 1999 (as amended) provides general requirements for the establishment of collective investment schemes with regard, inter alia, to the ‘object of the investment’,8 the ‘categories of investor targeted’,9 and ‘the manner of participating in open-/closed-ended funds’10 in connection with the subscription and redemption of units/shares and the frequency thereof, as well as with the minimum subscription amount.
6.18 Only collective investment schemes falling in one of the categories enumerated in DM 228 are permitted. The ‘catalogue’ in DM 228 can be extended to include new types of collective investment schemes, provided that they comply with the fundamental features of collective management in the TUF. DM 228 will be amended to complete the implementation of the AIFMD in Italy but, as of the date of this chapter, such modifications have not yet been enacted.
6.19 Therefore, the description of the articles of DM 228 in the following paragraphs refers to the pre-AIFMD text and any reference to ‘current’ or ‘currently’ in these paragraphs refers to the law as it stands before the changes are made in connection with the implementation of the AIFMD. Conversely, ‘DM 228R’ refers to DM 228 after the implementation of the AIFMD, as taken from the latest available draft.
6.20 DM 228 provides for the following types of Italian collective investment schemes: (i) harmonized open-ended funds; (ii) non-harmonized open-ended funds; (iii) closed-ended funds; (iv) reserved funds; (v) guaranteed funds; and (vi) speculative funds.
6.21 Harmonized open-ended funds (article 8 of DM 228) are UCITS funds organized under Italian law.
6.22 Non-harmonized open-ended funds (article 9 of DM 228) are best described as Italian domestic non-UCITS retail schemes (NURSs). Their investment policies and restrictions must comply with requirements of the Bank of Italy. The requirements are set out in the Bank of Italy Regulation on Collective Savings Management of 8 May 2012 (‘BOI Regulation 2012’). In essence, the rules for Italian NURSs are similar to the rules for UCITS funds, subject to certain exemptions.
(p. 278) 6.23 Non-harmonized open-ended funds may invest up to 20% of their assets in Italian ‘speculative funds’ or foreign funds, similar to the Italian ‘speculative funds’ that would qualify for authorization in Italy. The speculative or foreign fund must:
6.24 Closed-ended funds (article 12 of DM 228), which category includes real-estate funds (article 12 bis of DM 228), must be used if more than 10% of the fund’s assets are invested in certain financial instruments specified in DM 228, such as, inter alia, real estate, equity interests in real estate companies, claims, and securities representing claims.
6.25 Reserved funds (article 15 of DM 228) can be open-ended or closed-ended. These funds are only available to those categories of investors as specified in the relevant fund’s rules, and not investors generally. DM 228 provides that reserved funds can establish investment limits different from those established by the ‘prudential rules for limiting and spreading risk issued by the Bank of Italy’ (article 15.3 of DM 228).
6.26 Guaranteed funds (article 15bis of DM 228) can be open-ended or closed-ended funds and may be available to retail and/or professional investors. They must comply with the BoI Regulation’s requirements regarding risk limitation and diversification. Guaranteed funds, as implied in the definition, ‘guarantee the return of the capital invested or payment of a minimum return’ through agreements, which can include swap agreements with banks, insurance companies, or other authorized intermediaries.
6.27 Speculative funds (article 16 of DM 228)11 are funds which have less than 200 unit-holders/shareholders, irrespective of whether these investors are retail or professional investors, who each invest at least EUR 500,000 and the units/shares of the fund have not been publicly offered. Speculative funds, pre-AIFMD, are not subject to regulatory restrictions on their investment powers. In particular, article 16 of DM 228 provides that speculative funds may invest ‘by way of derogation from the prudential rules for limiting and spreading risk issued by the Bank of Italy’. Accordingly, the fund’s powers are limited only as set out in its constitutive and offering documents.
(p. 279) 6.28 The Bank of Italy initially determined that an SGR may not promote and manage both speculative funds and UCITS funds, but this restriction was lifted in 2007.
6.29 The possibility of marketing AIFs to retail investors has not been affected in the post-AIFMD Italian regulatory system, given that article 44 of the TUFR expressly contemplates such marketing.
6.30 The latest draft of DM 228R, which implements the AIFMD, will amalgamate the categories ‘reserved funds’ and ‘speculative funds’ and replace them with the category ‘alternative funds’. This suggests that the other categories are not AIFs. That appears to be incorrect in view of the definition in Article 4(1)(a) of the AIFMD, which clearly includes all other categories under DM 228, except UCITS funds.
6.31 Unfortunately, the TUFR12 is not very helpful either, because the definitions of ‘alternative collective investment schemes’ contained in article 1.1 m-ter, m-quinquies, and m-sexies of the TUFR (concerning, respectively, Italian, EU, and non-EU AIFs) only mention, with an evident tautology, that the alternative collective investment schemes are those covered by the AIFMD, but the AIFMD does not regulate AIFs as such, only managers of AIFs.