CFCL Investment regulation – Italy

Regulatory structure

Please refer to the Market infrastructure - Italy for the complete information about the Regulatory structure.

Holding restrictions

Disclaimer

The information contained in the Holding Restrictions is based on the legal opinion obtained by CBL that was issued on 12 January 2023. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Holding Restrictions do not constitute legal advice and clients should seek advice from independent professional counsel.

Clients are responsible for ensuring compliance with the disclosure requirements and agree to indemnify and hold harmless CFCL, for any loss, expense, liability, damage or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.

Holding Restrictions – Register Market - Italy

Restrictions on clients

No general restrictions on client residency for holdings held through CFCL. However, certain funds may impose specific restrictions on investor domicile.

Some restrictions include:

• The documentation of the funds (e.g. contractual documentation or articles of incorporations of the fund) in respect to eligible investors or transfer restrictions;
• Restrictions on investments by or on behalf of US persons;
• Tax status of the investment fund;
• AML/CTF and sanctions law;
• Passporting requirements in relation to marketing/sale in or into the jurisdiction where the investor is domiciled.

In the case of foreign investment funds, we would expect these restrictions to stem under local laws.

Restrictions on settlement

There is no general restriction on settlement, however certain funds may impose specific settlement/transfer restrictions, e.g. on settlement currencies. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering transactions.

Transfers within different accounts of the same client are not permitted by CFCL in this market.

Holding Restrictions – CSD Market - Italy

Investment restrictions do not exist for general investment purposes in listed and unlisted securities in Italy.

Disclosure requirements

Introductory information and categories

This section provides general information about the disclosure requirements for fund securities holdings with which Clearstream Fund Centre must, according to the information available at the time of the present publication, comply with each of the domestic markets and fund markets covered by the Disclosure Requirements.

Fund securities that are held remotely are usually not disclosed by CFCL. A disclosure request received by CFCL regarding such a holding will be forwarded to the relevant client without assessing its validity and the CFCL Client shall handle the request on a voluntary basis.

Disclosure Requirements are only available for those countries where CFCL has a link to the respective domestic market or direct access to local domiciled funds that are held in Clearstream’s name on the register.

For fund securities holdings where CFCL has no such link or direct access to the register, clients must be aware that local laws might provide for mandatory disclosure. A disclosure request in this regard will be forwarded to clients without assessing its validity. Clients commit not to unreasonably withhold their consent to such a request and agree to indemnify CFCL for damages resulting directly from non-compliance with mandatory local disclosure requirements.

In most cases, the obligation to disclose is based on the domestic equivalent of a Companies Act, relevant investment funds act or anti-money laundering act and covers all security types.

In some instances, the obligation to disclose is based on stock exchange laws or regulations and only applies to listed domestic and foreign securities.

The Disclosure Requirements do not constitute legal advice and the Clients should seek independent professional advice in relation to fund securities deposited with CFCL, especially as, for those jurisdictions in which no disclosure obligation falls on CFCL, there may be separate disclosure requirements that apply directly to clients of CFCL, shareholders and beneficial owners.

Please note that CFCL is not always given comprehensive information or advised of changes affecting local disclosure requirements.

It remains the sole responsibility of the Client to ensure compliance with local disclosure requirements. If a requirement is not met, it is the Client who will be liable to any related penalty. Clients are therefore advised to seek independent legal advice on the existence and interpretation of local disclosure requirements.

In the case of a discrepancy between the general information contained in this document and the information provided by CFCL for a specific market, as applicable (irrespective of whether this information has been obtained from an agent of Clearstream Fund Centre, or, as the case may be, a foreign regulator of a branch of CFCL), the information provided by CFCL for the specific market as applicable, shall prevail.

N.B.: In all countries, if it is suspected that a disclosure obligation has been breached (for example, that a threshold of holdings under custody has been crossed without being reported), the regulators and the authorities may have the power to investigate. Moreover, in all countries, disclosure obligations might be triggered by enforceable judgements of the competent jurisdiction of the country in question.

Disclosure categories

Clearstream Fund Centre classifies disclosure scenarios according to the following market categories:

Category 1

Markets where disclosure by Clearstream Fund Centre to issuers, investment fund managers and/or to regulators or market authorities is mandatory under applicable law.

Category 2

Markets where disclosure by Clearstream Fund Centre of account holders to issuers, investment fund managers and/or foreign regulators or market authorities is a legal obligation in respect of securities in specific circumstances.

Category 3

Markets where there is no obligation for Clearstream Banking as custodian of Clearstream Fund Centre to disclose account holders to issuers, investment fund managers and/or regulators, notwithstanding any disclosure requirement falling directly on clients of Clearstream Banking, shareholders and/or beneficial owners or notwithstanding disclosure necessary to obey an enforceable judgement of the country in question.

Disclosure requirements – Register Market - Italy

Disclosure Category: 2

Clearstream Fund Centre S.A. (“CFCL”) may be required to disclose the identity and holdings of clients and ultimate beneficial owners, upon request, in the case of holding of securities in Italian funds.

Consent

In order to comply with the local regulatory disclosure requirements, clients with holdings in Italian investment funds must consent and are hereby deemed to consent to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the Fund Manager, Transfer Agent, Regulator) as their attorney-in-fact, under power of attorney, to collect from CFCL the required information to be disclosed. Clients who do not grant such authority cannot hold such investment funds or financial instruments in their accounts with CFCL.

Clients will be required to sign a one-time declaration (OTC) prior to sending any order on Italian Domiciled Funds. This OTC will be available on our website under the name of "Italian Funds Tax Relief Indemnity Form"

Disclosure Requirements

Asset managers and registrars/transfer agents will likely require disclosure of details concerning investors (both a direct investor and, in some cases, the ultimate beneficial owner of the relevant investor) as a condition before permitting the subscription to the fund.

Background and legal basis

The legal basis for disclosure requirements may arise from the following:

• Italian AML Decree.

Sanctions

Non-compliance with the disclosure requirements by CFCL, CFCL's client and/or the ultimate beneficial owner may result in the fund manager or its agent refusing acceptance of CFCL as an investor and/or refusing acceptance of the proposed investment. Each subscription of funds will be subject to KYC obligations.

Disclosure requirements – CSD Market - Italy

Disclosure Category: 1

For holdings in Italian securities, there is a legal obligation on Clearstream Fund Centre to disclose information including, without limitation: identity and holdings of ultimate beneficial owners, identity and holdings of clients [quantity of positions and/or number of subscribers].

The identity of the ultimate beneficial owners must be reported to the issuing Company at the time of any event in which the obligation of reporting/disclosing the ownership name is mandatory.

The heading must report (Art 4 RD 239/42):

a) for individuals: name, surname, date and place of birth, address and nationality;

b) for legal entities: full company name and registered address of the company;

c) for legal entities without “legal personality”: full company name, registered address of the company, personal data of the representatives (name, surname, date and place of birth, address and nationality)

There is, in addition, an obligation on CFCL to disclose to issuers, on payment, its clients’ dividend entitlements, even where no relief from withholding tax is sought.

Consent

Clients who hold Italian securities in CFCL consent and are hereby deemed to consent to disclosure to the requestor and to the appointment of such requestor as their attorney-in-fact to collect from CFCL such information as is required to be disclosed. Clients who do not want to grant such authority to Clearstream Banking should refrain from holding such securities in their account with Clearstream Fund Centre.

Disclosure Requirement

Clients are advised that local laws and regulations require Clearstream Fund Centre to disclose, to issuers, their agents and the Italian authorities, securities trading and holding information and the identity of the ultimate beneficial owners of certain securities.

Therefore, clients who hold Italian securities in Clearstream Fund Centre must provide Clearstream Fund Centre, upon request and as soon as possible, with information about the beneficial ownership of these holdings, in which case clients are deemed to have obtained, directly or indirectly, the necessary consent from the relevant beneficial owners. Clearstream Fund Centre may disclose to the requestor the identity of clients who are not in a position to provide such information when requested.

Background and legal basis

Article 83-novies of Legislative Decree 58/1998 (TUF) as well as article 26 of the Rules governing central depositories, settlement services, guarantee systems and related management companies (adopted by the Bank of Italy and CONSOB on 22 February 2008), require intermediaries (in this case, Clearstream Fund Centre) to disclose to issuers or their agents:

• The names of persons requesting the statements envisaged in article 83-sexies in order to attend shareholder meetings;
• The names of persons requesting the certificates envisaged in article 83-quinquies, paragraph 3, in order to be entitled to exercise the other rights pertaining to the financial instruments;
• The names of persons who have received dividends and those who, exercising option rights or other rights, have acquired ownership of registered financial instruments, specifying the related quantity.

Furthermore, according to article 83-duodecies of Legislative Decree 58/1998, Italian companies with shares admitted to trading on a regulated market or on multilateral trading facilities may ask from custodians, at any time, the identification data of the shareholders who have not expressly prohibited the disclosure of the same, together with the number of shares registered in the accounts payable to them. Issuers shall record such xccinformation in their shareholders’ register. Therefore, clients that hold Italian financial instruments in Clearstream Fund Centre should provide Clearstream Fund Centre with information about the beneficial ownership of these holdings.

The legal basis for disclosure requirements may arise from the following:

• Italian AML Decree

Obligation to report threshold crossings

The relevant regulatory framework of the subject disclosure requirements is constituted by article 120 of TUF and articles 117, 117-bis, 118, 119, 119-bis, 119-ter, 120, 121, 122 and 122-bis of the Regulation on Issuers adopted by CONSOB under resolution 11971 of 14 May 1999, as amended time by time.

Persons who participate in the share capital of a listed issuer shall inform the investee company and CONSOB in the following circumstances:

• The threshold of 3% is exceeded;
• The thresholds of 5% 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50% 66⅔%, 75%, 90% and 95% are reached or exceeded;
• The holding falls below the thresholds specified above.

These obligations also apply to the following:

• Shareholders whose holdings reach, exceed or fall below these thresholds as a consequence of events that involve changes in the share capital;
• Issuers of listed shares in relation to treasury shares held directly or via subsidiary companies.

For the purpose of the subject disclosure requirements, only voting shares are considered for the calculation of ownership and thresholds, even if the voting rights belong to or are assigned to third parties or are suspended. Holdings are also considered to be those shares in relation to which the voting right is due or is assigned to a party, if one or a combination of the following cases apply:

• The voting right is due in the capacity as pledgee or usufructuary;
• The voting right is due in the capacity as depository, provided that said right can be discretionally exercised;
• The voting right is due by virtue of proxy, provided that said right can be discretionally exercised in the absence of specific instruction provided by the delegant;
• The voting right is due on the basis of an agreement that envisages its provisional and remunerated transfer.

Disclosure must also be made by those who hold potential holdings subject to purchase, directly or via nominees, trustees or subsidiary companies, where the holding reaches or falls below the threshold of 2% and/or reaches, exceeds or falls below the thresholds of 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50% and 75%.

Those who hold an effective holding or a potential holding subject to purchase greater than 2% shall inform the investee company and CONSOB of the holding of potential holdings subject to sale, directly or via a third party, trustee or subsidiary company, when the underlying shares exceed or fall below the thresholds of 2%, 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%.

For the purpose of the calculation of the potential holdings, the shares underlying the financial instruments assigned to the purchase option shall be calculated separately from those underlying the financial instruments assigned to the right to sell.

Shares acquired by exercising conversion rights or warrants shall be included in the calculation for these purposes only if the acquisition can be made within sixty days.

Beneficial owners must notify the participating listed company and CONSOB without delay and in any event within five business days of the date of the transaction leading to the obligation, regardless of the date on which it is carried out, or of the date on which the obliged party has been informed of the events that involve changes in the share capital.

Disclosure shall be made using the forms contained in annex 4A and observing the instructions contained in annex 4B, which are available at http://www.consob.it/ under legal framework/laws and regulations.

The subject disclosure obligations shall not apply in the cases listed in article 119-bis of TUF and, in particular, as follows:

• To those who acquire the shares exclusively for the purpose of offsetting and settling transactions covering said shares within a maximum deadline of three trading days after the transaction; or to central counterparties for the shares covered by the transactions that it guarantees and subjects to executive procedures, within the time limits required for the completion of said procedures;
• To those who hold the shares within the sphere of the provision of the share custody service, provided that the latter can only exercise the voting rights pertaining to said shares in accordance with the instructions provided in writing or via electronic medium by the shareholders due the voting right, with the consequence that local and foreign intermediaries holding securities in custody on behalf of final beneficial owners do not have to monitor and report threshold crossings unless such custodians can exercise at their own discretion the voting rights attached to securities held in custody (which Clearstream Fund Centre cannot).

The regulator CONSOB may, at any time in the course of investigations into threshold crossings, ask intermediaries to disclose shareholder details. If such a request is received by Clearstream Fund Centre, disclosure would be viewed as a legal requirement for which the consent quoted above is deemed to have been given.

Please refer to Disclosure Requirements – Italy  for complete information on Italy Disclosure requirements.

Disclaimer

The information contained in the Disclosure Requirements is based on the legal opinion obtained by CBL acting as sub-custodian for CFCL that was issued on 12 January 2023. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Disclosure Requirements do not constitute legal advice and Clients should seek advice from independent professional counsel.

Clients are responsible for ensuring compliance with the disclosure requirements and agree to indemnify and hold harmless CFCL, for any loss, expense, liability, damage or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.