ADOPTS the following regulation:

Transcription

1 DECREE no. 485 of 14 November 1997 (Gazzetta Ufficiale no. 13 of the Italian text alone is authentic) Regulation containing the rules governing the organization and operation of the compensation schemes referred to in Article 35.2 of Legislative Decree 415/1996, transposing Directive 93/22/EEC on investment services in the securities field THE MINISTER OF THE TREASURY Having regard to Legislative Decree 415/1996; Having regard to Article 35, which states that the Ministry of the Treasury, after consulting the Bank of Italy and Consob, shall adopt a regulation on the organization and operation of compensation schemes and makes the provision of investment services by intermediaries subject to membership of such a scheme; Having regard to Article 36, which states that branches of EU investment firms and banks established in Italy may join one of the above-mentioned compensation schemes, with reference exclusively to the activity carried on in Italy, and that branches of non-eu investment firms and banks established in Italy must join a recognized compensation scheme, with reference exclusively to the activity carried on in Italy, unless they are members of an equivalent foreign compensation scheme; Having regard to Article 62, which provides for the adaptation of the National Compensation Fund to comply with the regulation referred to in Article 35; Whereas it is necessary to issue the regulation on the organization and operation of compensation schemes; Having consulted the Bank of Italy and Consob; Having regard to Articles 17.3 and 17.4 of Law 400/1988; Having heard the opinion of the Council of State, expressed in the meeting of the advisory section for legislative acts on 3 July 1997; Having decided not to adopt the suggestion of the Council of State to exclude all transactions carried out by nominees from compensation on a general basis, in view of the need to protect the legitimate interests of investors and the proper implementation of the internal market; Having regard to the communication sent to the President of the Council of Ministers under Article 17.3 of Law 400/1988 on 16 September 1997; ADOPTS the following regulation: Article 1 Definitions 1. For the purposes of this regulation: a) compensation schemes shall mean private-law entities having legal personality, possibly set up as consortium companies, established for the protection of claims on firms and intermediaries referred to in subparagraphs b), c) and d) below; b) investment firms shall mean EU and non-eu investment firms as defined in Articles 1.5e) and 1.5f) of Legislative Decree 415/1996 (hereinafter the decree ); c) financial intermediaries shall mean financial intermediaries entered in the register referred to in Legislative Decree 385/1993, as amended (hereinafter the Consolidated Law on Banking) authorized to provide investment services under Article 2.4 of the decree;

2 d) intermediaries shall mean Italian banks, Italian investment firms (società di intermediazione mobiliare - SIMs), financial intermediaries, stockbrokers, foreign (EU and non-eu) banks and investment firms; e) investors shall mean clients who entrust cash or financial instruments to intermediaries in connection with investment transactions; f) investment transactions shall mean investment services referred to in Article 1.3 of the decree and the ancillary service referred to in Article 1.4a) of the decree; g) group shall mean that defined by the Bank of Italy pursuant to Article 6.4 of the decree. Article 2 Recognition of compensation schemes 1. For the purposes of the recognition of legal entities referred to in Article 1.1a), the legal representatives thereof shall submit an application to the Ministry of the Treasury. The application must be accompanied by the constituent instruments and draft operating rules. 2. Compensation schemes referred to above shall have their registered office in Italy. 3. The above-mentioned constituent instruments shall specify the aims, the number of member intermediaries and their contribution obligations, and the criteria and procedures for contributions; they shall also provide for all intermediaries that apply to be able to join. 4. The documents in question must also establish the criteria and procedures for paying claims to investors having entitlement and lay down rules for the representative, administrative and control bodies and their working. From an operational point of view, the bylaws must establish the administrative and accounting principles for operations, leaving the detailed description of the internal administrative procedures to the operating rules. 5. The Ministry of the Treasury, upon verifying that the prescribed conditions are satisfied, shall decide within ninety days of receiving an application accompanied by the necessary documentation, after consulting the Bank of Italy and Consob; the Ministry of the Treasury may request clarifications and additional information, including documents, upon receipt of which a new time limit of sixty days shall run. 6. Intermediaries must disclose their membership of a compensation scheme. 7. The legal representatives of compensation schemes shall send the names of member intermediaries to the Ministry of the Treasury, the Bank of Italy and Consob, specifying the investment services and ancillary services they are authorized to provide. 8. Article 62.1 of the decree shall be unaffected. Article 3 Intervention of compensation schemes 1. Compensation schemes shall pay investors claims: a) in cases of compulsory administrative liquidation of Italian banks and Italian investment firms; b) in cases of bankruptcy or a composition with creditors of stockbrokers and financial intermediaries. c) in cases of intervention by compensation schemes of the home countries of foreign banks and investment firms with branches in Italy or, if compensation schemes are not provided for in these countries, in cases in which such intermediaries are subject to procedures analogous to those referred to in subparagraphs a) and b).

3 Article 4. Claims eligible for payment 1. Compensation schemes shall pay investors claims, in respect of cash and financial instruments deriving from investment transactions, on: a) Italian banks and Italian investment firms, financial intermediaries and their branches in other EU countries; b) branches in Italy of foreign banks and investment firms that are members of a compensation scheme, with reference exclusively to the activity carried on in Italy; c) stockbrokers. 2. The compensation scheme may also provide for the payment of investors claims referred to in paragraph 1 on non-eu branches of Italian banks and Italian investment firms and of financial intermediaries. 3. Claims of the following categories of persons shall be ineligible for payment by compensation schemes: a) investors who have been convicted of crimes referred to in Articles 648-bis and 648-ter of the Penal Code; b) investors who contributed to the insolvency of the intermediary, as ascertained by the bodies responsible for the insolvency procedure; c) banks, Italian investment firms, stockbrokers, financial companies referred to in Title V of the Consolidated Law on Banking, investment firms, insurance companies, collective investment schemes and pension funds; d) international organizations, government departments and local authorities; e) companies belonging to the same group as the intermediary; f) shareholders who, directly or through nominees, hold at least 5% of the intermediary s capital; g) directors, managers, members of the board of auditors and the external auditors of the intermediary or of other companies belonging to the same group as the intermediary who were in office during the last two years; h) spouses and relatives up to the first degree of kinship of persons referred to in subparagraphs a), b), c), f) and g). 4. Transactions carried out by nominees on behalf of persons referred to in paragraphs 3f) and 3g) shall not be eligible for any compensation whatsoever. Article 5 Cover 1. The payment of the claims of each investor shall be paid up to a maximum corresponding to 20,000 ECUs. Claims shall be admitted for payment that have been verified pursuant to Article 35.5 of the decree and entered in the statement of liabilities, net of any partial allotments made by the bodies responsible for the insolvency procedure. The conversion into Italian lire shall be made at the exchange rate obtaining on the day the statement of liabilities was filed and became enforceable or the unappealable decision ratifying the composition with creditors was filed.

4 2. For the purpose of verifying compliance with the limit referred to in paragraph 1, the claims of each investor deriving from individual investment transactions shall be summed with the part pertaining to the investor of claims deriving from joint investment transactions carried out by two or more investors. In the case of joint investment transactions claims shall be understood to be divided equally among the investors unless expressly stated otherwise. 3. In the case of a joint investment transaction carried out by two or more persons in their capacity as shareholders of a company or members of an association, the investment shall be deemed to have been made by a single investor for the purpose verifying compliance with the limit provided for in paragraph No investor may benefit from compensation exceeding the total claims lodged. Compensation disbursed under this regulation may not be cumulated with compensation disbursed under Article 96-bis of the Consolidated Law on Banking. To this end, compensation schemes shall adopt suitable forms of coordination with bank deposit protection schemes referred to in Legislative Decree 659/ Under Article 35.4 of the decree, compensation schemes shall be subrogated to the rights of investors vis-à-vis the intermediary up to the amount of compensation paid to them. The scheme shall inform the body responsible for the insolvency procedure of payments made and, within such limits, shall receive the amounts of partial allotments. Article 6 Payment procedures and time limits 1. Compensation schemes shall specify in the operating rules referred to in Article 2.1 the procedures and time limit for the submittal of applications for compensation to the scheme by investors included in the statement of liabilities of the intermediary s compulsory administrative liquidation or insolvency or composition with creditors. Such time limit may not be less than five months, starting from the date of investors receipt of the notification of the definitive inclusion of their claims in the statement of liabilities or of the unappealable decision ratifying the composition with creditors. Expiration of the time limit may not be invoked against investors who show that they were unable to comply with it for reasons not imputable to them. 2. Payments shall be made within three months of the expiration of the time limit referred to in paragraph 1. In cases in which, owing to exceptional circumstances, a compensation scheme is unable to comply with such time limit, it may apply for an extension to the Ministry of the Treasury, which shall decide after consulting the Bank of Italy and Consob. The extension may not be more than three months. Article 7 Financing and insurance 1. Compensation schemes shall establish the criteria and procedures for extraordinary additional contributions by member intermediaries serving to ensure such schemes are able to meet their payment obligations within the time limits referred to in Article Contribution obligations may be differentiated according to general and objective criteria that are non-discriminatory and fair. 3. Sums accruing to compensation schemes in respect of contribution obligations must be deposited with leading banks, identified on the basis of the characteristics specified in the constituent instruments referred to in Article 2.1. Compensation schemes may make investments to the extent and in the forms decided by the governing body exclusively in: a) government and government guaranteed securities issued by OECD countries or residents thereof;

5 b) debt securities traded on regulated markets recognized under Article 51 of the decree or regulated markets in the United States, Japan or Canada; c) units of UCITS that may not invest their assets in securities other than those referred to in subparagraphs a) and b). 4. Compensation schemes may take out insurance policies with insurance companies authorized to issue such policies in terms of line of business and size of risks. Even where such policies exist, compensation schemes shall remain directly responsible vis-à-vis persons having entitlement to payments under this regulation. Article 8. Exclusions 1. Intermediaries may be excluded from a compensation scheme in the event of exceptionally serious failures to fulfil the obligations deriving from membership of the scheme. The exceptionally serious failures that trigger exclusion and the procedures for this to be publicized shall be established in compensation schemes bylaws. 2. Compensation schemes shall notify such failures to intermediaries and grant them twelve months in which to fulfil the obligations deriving from membership, informing the supervisory authorities accordingly. Upon expiration of such time limit to no effect, the compensation scheme, subject to authorization by the Ministry of the Treasury after consulting the Bank of Italy and Consob, shall inform the intermediary in question of its exclusion and arrange for this to be publicized in accordance with the procedure referred to in paragraph The exclusion procedure may not be started or continued for banks or Italian investment firms that have been placed under special administration. 4. In the event of a failure to fulfil the obligations deriving from membership of a compensation scheme on the part of an Italian branch of an EU bank or investment firm, the compensation scheme shall notify the failure to the intermediary and grant it twelve months in which to fulfil its obligations, informing the supervisory authorities that issued the authorization accordingly. Upon expiration of such time limit to no effect, the compensation scheme, subject to agreement by the authorities that issued the authorization, shall inform the intermediary of its exclusion. 5. Investors claims deriving from investment transactions carried out up to the date of the announcement of the exclusion of the intermediary from the compensation scheme shall be met by the compensation scheme. Article 9 Measures vis-à-vis excluded intermediaries 1. Where the intermediary that failed to fulfil the obligations deriving from membership of a compensation scheme is an Italian bank, an Italian investment firm, a financial intermediary, a stockbroker, an Italian branch of a non-eu bank or investment firm, the authorities that issued the authorization to provide investment services shall revoke it when the intermediary ceases to be a member of the compensation scheme. The possibility for Italian banks and Italian investment firms to be placed in compulsory administrative liquidation shall be unaffected. Investors claims deriving from investment transactions carried out up to the revocation of the authorization shall be met by the compensation scheme.

6 Article 10 Control body 1. One member of the control body and one alternate shall be appointed by the Minister of the Treasury. The appointments shall be made within thirty days of the recognition of a compensation scheme. 2. The chairman of the control body shall be the member appointed by the Minister of the Treasury. Article 11 Changes to compensation schemes and revocation of the recognition thereof 1. Every change to the bylaws and operating rules of a compensation scheme that entails changes to the conditions and acts referred to in Article 2 must be approved in advance by the Ministry of the Treasury after consulting the Bank of Italy and Consob. 2. The Ministry of the Treasury acting on a proposal from the Bank of Italy or Consob may revoke the recognition of a compensation scheme if one or more of the conditions referred to in Article 2 are no longer satisfied. Article 12. Adaptation of the National Compensation Fund 1. The Management Committee of the National Compensation Fund shall approve, under Article 62.2 of the decree, the amendments to its bylaws needed to adapt its organization and operation to this regulation. The bylaws, in addition to what is prescribed in Article 2, must establish the rights and obligations of member intermediaries and provide for a general meeting of members, an executive body and a control body. The Management Committee shall also approve the operating rules governing the Fund s interventions. 2. The bylaws and operating rules referred to in paragraph 1 shall be approved by the Ministry of the Treasury after consulting the Bank of Italy and Consob within sixty days in a measure published in the Gazzetta Ufficiale della Repubblica italiana. As of such date of approval, the effects of Article 62.4 of the Decree shall be produced and other compensation schemes may be recognized. 3. The chairman of the Management Committee shall convene the first general meeting of the members of the Fund within six months of the entry into force of the acts referred to in paragraph The Management Committee of the National Compensation Fund shall remain in office until the appointment of the new bodies provided for in the bylaws; the board of auditors in office shall be supplemented with the appointment of alternates. 5. Subsequent amendments to the bylaws and the operating rules shall be subject to Article 11 of this regulation. This decree, bearing the state seal, shall be included in the official collection of legislative acts of the Italian Republic. All persons required to do so shall observe it and have it observed. Rome, 14 November 1997 The Minister: CIAMPI NB: In the event of discrepancies, the text published in the Gazzetta Ufficiale shall prevail.