FAQs - Asset managers

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What kind of supervision are asset management companies subject to?

Companies providing collective asset management services are supervised by the Bank of Italy and Consob, within their respective remits. The Bank of Italy is responsible for supervising risk mitigation, stability, and sound and prudent management, while Consob is responsible for supervising the transparency and fairness of the conduct of intermediaries.

Controls are carried out with due regard for the business aspects of the supervised entities, which set their own strategies, organizational models and investment policies independently in compliance with the prudential regulatory framework.

In its supervisory role, the Bank of Italy carries out analyses and takes measures designed to promptly detect any signs of anomalies in the intermediaries’ technical and organizational arrangements, and urges them to take the necessary corrective measures. It performs both off-site inspections – by collecting, processing and systematically analysing a comprehensive set of statistical, accounting and administrative data – and on-site inspections to confirm the quality and accuracy of the data provided by intermediaries and to have a better understanding of their organization and management. On-site inspections are tailored to reflect the characteristics, size and complexity of each intermediary and focus on material risks, corporate governance and internal controls.

These checks cover all operations and evaluate the solidity of organizational structures, the quality of risk management and control, the adequacy of capital to cover losses, and transparency and fairness vis-à-vis customers.

Is there a form to submit applications?

No, there is no standard application form. The Collective Asset Management Regulation specifies the documents to be attached, provides templates for the business plan and organizational structure report, and indicates the criteria for drafting the memorandum and articles of association for SICAVs and SICAFs.

What documents should I attach to my SGR licensing application?

The information and documents to be submitted with your licensing application are set out in the Collective Asset Management Regulation and are, as a general rule, the following:

  1. memorandum and articles of association;
  2. proof of payment of capital contributions, issued by the head office of the bank where the payment was made;
  3. information on the origin of the money used to pay capital contributions;
  4. a business plan, an organizational structure report and any other information needed to fully illustrate the operations that the company intends to carry out;
  5. a list of entities directly or indirectly holding an interest in the share capital, indicating their respective holdings in absolute and percentage terms; for indirect holdings, companies must report the entities through which such interests are held;
  6. evidence showing that direct and indirect qualified shareholders meet the relevant requirements;
  7. a list of all members of the corporate bodies in charge of strategic oversight, management, and auditing, as well as the directors-general and anyone holding equivalent positions, indicating their names and general details;
  8. the minutes of the board meeting confirming that the members of the management body meet the fit and proper requirements and that there are no grounds for incompatibility and suspension from office under Article 36 of Decree Law 201/2011 (interlocking rules);
  9. description of the business group of belonging, including by means of charts;
  10. if relevant, proof that the company is part of an investor-compensation scheme recognized under Article 59 of the TUF.

The documents referred to in points f) and h) must be no older than 6 months prior to the date of submission of the licensing application.

What documents should I attach to SICAV and SICAF licensing applications?

The information and documents to be submitted with the licensing application are set out in the Collective Asset Management Regulation and are, as a general rule, the following:

  1. copies of the company's memorandum and articles of association; the corporate purpose stated in the articles of association must be exclusively 'the collective investment of the capital obtained by the offer of its own shares' for SICAVs and 'the collective investment of the capital obtained by the offer of its own shares and of the financial instruments of its equity holdings indicated in the said articles (of association)' for SICAFs;
  2. information on the origin of the money used to pay capital contributions;
  3. a business plan, an organizational structure report and any other information needed to thoroughly illustrate the operations that the company intends to carry out;
  4. a list of entities directly or indirectly holding an interest in the share capital, indicating their respective holdings in absolute and percentage terms; for indirect holdings, companies must report the entities through which such interests are held;
  5. evidence showing that direct and indirect qualified shareholders meet the relevant requirements;
  6. a list of all members of the corporate bodies in charge of strategic oversight, management, and auditing, as well as the general managers and anyone holding equivalent positions, providing their names and general details;
  7. documents showing that the members of the management body meet the professionalism, integrity and independence requirements and that there are no grounds for incompatibility and suspension from office, as referred to in Article 36 of Decree-Law 201/2011;
  8. a description of the business group of belonging, including by means of charts;
  9. if relevant, proof that the company is part of a compensation scheme for investor protection recognized under Article 59 of the TUF.

The documents referred to in points e) and f) must be no older than 6 months prior to the date of submission of the licensing application.

For externally managed SICAVs and SICAFs, please refer to the specific FAQ.

What exemptions are there for sub-threshold managers of reserved AIFs?

Sub-threshold managers providing collective asset management services for reserved AIFs only are those who:

  • manage assets, including any assets acquired through leverage, not exceeding the €100 million threshold; or
  • manage assets not exceeding the €500 million threshold, provided that the AIFs do not use leverage and that the right of shareholders to redeem units or shares cannot be exercised for at least five years from the date of initial investment in each AIF.

The law provides for the following exemptions for these managers:

  • for the purposes of licensing, they must have a share capital of at least €50,000;
  • instead of a business plan, they are required to provide information to the Bank of Italy as specified in Article 5(2) of Commission Delegated Regulation (EU) 231/2013;
  • the rules on remuneration policies and practices shall not apply.

What are the specific requirements for the licensing of externally managed SICAVs and SICAFs?

In accordance with the Collective Asset Management Regulation, applicants are subject to the following licensing requirements:

  • they must own a minimum capital of €50,000, as required by the Italian Civil Code for the formation of joint-stock companies;
  • they must demonstrate that qualified shareholders meet the statutory requirements, with the exception of the financial soundness requirement;
  • they are exempted from submitting a business plan and an organizational structure report;
  • their articles of association must state that the management of all assets is entrusted to an SGR, an EU management company or an EU Alternative Investment Fund Manager (AIFM). A declaration of acceptance of this mandate by the designated SGR, EU management company or EU AIFM must be attached to the application.

Applications may be rejected when the technical or organizational arrangements of the designated management company do not ensure that the SICAV's or SICAF's assets are managed in the interest of investors.

What are the specific requirements for the licensing of SISs?

Simple investment companies (SISs) are Italian AIFs formed as SICAFs which directly manage their assets and comply with all of the following requirements:

  • their sole corporate purpose is the direct investment of the assets collected in SMEs not listed on regulated markets which are in the testing, set-up or start-up phase;
  • their equity does not exceed €25 million;
  • they do not use leverage;
  • they have at least the share capital specified in Article 2327 of the Italian Civil Code (€50,000);
  • they must take out professional indemnity insurance covering the risks arising from their business.

SISs are subject to the same rules as SICAFs. Due to their small size and lean structure, these companies are not subject to a number of asset manager obligations, regulated by the Bank of Italy and Consob, including on the following: corporate governance and general organizational requirements; capital adequacy; risk mitigation; outsourcing of critical or important operational functions, services or activities; transparency and fairness of conduct. Similarly, they are not subject to the rules applicable to Italian UCITSs concerning, among other things, investment criteria and restrictions, and the prudential rules on risk mitigation and diversification.

SISs are also required to adopt an adequate governance and control system to ensure sound and prudent management and compliance with the provisions applicable to them, as well as to apply the provisions laid down by Consob regarding the marketing of UCITSs.

For further details on the specific requirements for SISs see the Bank of Italy and Consob supervisory guidelines on Simple Investment Companys (SISs) (only in Italian).

How does the Bank of Italy assess ownership structures?

When assessing licensing applications from newly-incorporated entities, the Bank of Italy pays particular attention to the financial soundness and the quality of shareholders, in order to make sure that they are able to manage start-up risks and, in the event of a crisis, to minimize the costs associated with value destruction.

For this purpose, the Bank of Italy assesses the quality of the qualified shareholders (i.e. investors that hold at least 10 per cent of shares or voting rights, or can exercise a significant influence over the intermediary) and the financial soundness of the business plan, based on the following criteria: the good repute, ethics, professionalism and expertise of those who, as a result of acquiring a qualifying holding, will perform administrative and management functions in the intermediary; the financial soundness of the qualified shareholders; the intermediary’s ability to comply with the provisions governing its business following the acquisition of a qualifying holding; the suitability of the group structure of the qualified shareholders for the purpose of effective supervision; no grounds to suspect that the acquisition is associated with money laundering or terrorism financing. The assessments are carried out in accordance with the provisions under Article 15 of the TUF, the Collective Asset Management Regulation of 19 January 2015, and the Bank of Italy Measure of 26 July 2022.

The analysis of the applicant’s ownership structure does not result in a separate decision on qualifying holdings or follow the procedures laid down in the relevant legislation, but feeds into the preliminary assessments for licensing purposes. 

This analysis is carried out based on the information and documents produced in accordance with the Bank of Italy Measure of 26 October 2021.

The above information must also be provided as part of the licensing procedures for the establishment of SICAVs and SICAFs that appoint an external manager pursuant to Article 38 of the TUF, insofar as they are compatible with the regulatory framework governing the licensing procedure of such intermediaries.

How does the Bank of Italy assess corporate governance and officers?

The Bank of Italy assesses the applicant’s governance to make sure it is suitable for managing the risks to which it is exposed, that it is consistent with the company’s business and size, and it is clear in the allocation of tasks among corporate bodies and in relations with shareholders.

The Bank verifies that the members of the management body comply with the requirements of good repute, fitness and independence under Ministerial Decree 468/1998. The members of the management body must also comply with the interlocking rules laid down in Decree Law 201/2011.

Intermediaries are responsible for identifying fit and proper members of the management body. Moreover, they must ensure that the appointees meet these requirements and criteria throughout their term of office.

What should be included in the business plan?

The plan should illustrate the company's business activity, its prospective business lines, the objectives pursued and the strategies to meet them, as well as any other information useful for evaluating the application, as detailed in the Bank of Italy Measure of 19 January 2015.

The plan should also provide information on how the intermediary plans to maintain financial soundness and comply with prudential regulations during the start-up phase, even if business volumes develop below expectations.

The financial statements for the first three financial years and a report on the organizational and technical structure must be attached to the business plan.

How does the Bank of Italy assess applicants’ business plans?

The Bank of Italy assesses applicants' business plans and organizational structure with a view to sound and prudent management and may require changes accordingly.

To this end, it assesses the following, among others:

  • the consistency of information and the reliability of forecasts;
  • the adequacy of the plan to ensure capital, income and financial soundness, as well as its compliance with prudential requirements throughout the reference period;
  • the adequacy of the organizational structure and internal controls;
  • the consistency of strategic planning, including with the target market.

The Bank of Italy may require shareholders to commit to providing financial support to the company for business development purposes or in the event of financial distress.

What should be included in the organizational structure report?

The organizational structure report, to be drawn up in accordance with the Bank of Italy Measure of 19 January 2015, shall include at least the following:

  • the composition, role and functioning of corporate bodies;
  • the composition and role of the individual committees, if any;
  • a description of the business strategies and strategic planning;
  • a description of the investment process;
  • a description of how the value of shares in the funds managed is assessed;
  • the structure of internal control functions and the anti-money laundering function;
  • a description of the company’s accounting and IT systems;
  • information on the identification and management of conflicts of interest and remuneration policies.

With reference to the description of the internal control and risk management system, the documentation submitted must specify, for each control function:

  • roles, responsibilities and reporting lines;
  • responsibilities of function heads;
  • number of persons allocated to each unit;
  • annual plan of checks by the audit functions.

Where corporate functions (processes, services or operations) are outsourced, applicants must submit evidence that these arrangements will not prevent the intermediary from complying with legal requirements, affect customer relationships, reduce the quality of the internal control system or hinder supervision. Please refer to the specific FAQ.

What information should be provided when corporate functions are outsourced?

Intermediaries can outsource corporate functions (processes, services or operations), including core functions, provided that these arrangements do not prevent the intermediary from complying with legal requirements, affect customer relationships, reduce the quality of the internal control system or hinder supervision.

Supervisory provisions require intermediaries to adopt specific corporate policies to ensure that the outsourced functions are performed properly, the internal control system works smoothly and external providers' operations are regularly monitored. Applicants outsourcing any corporate functions are required to include the following information, in accordance with the EBA/GL/2019/02 Guidelines:

  • a brief description of the outsourced operations;
  • the names of external providers, together with a BoD assessment – for core operations only – of their suitability, both in qualitative and quantitative terms, also considering any other outsourcing contracts they may have with other intermediaries;
  • the corporate outsourcing policy document setting out the following basic information, in line with the principle of proportionality: i) the decision-making process for outsourcing corporate functions; ii) the basic content of outsourcing contracts and the expected service levels for outsourced operations; iii) how outsourced functions are monitored; iv) internal information flows intended to ensure the full understanding and governance of the risk factors associated with outsourced functions; v) contingency plans for providers’ failure to perform outsourced operations properly;
  • a summary of the outsourcing contract for core operations specifying the parties’ main rights and obligations; the expected service levels, in objective and measurable terms, and the service performance metrics; any conflicts of interest and the corresponding mitigation measures; the contract duration and renewal terms, as well as the mutual obligation provisions for contract termination;
  • a description of the measures taken, including organizational measures, to ensure ongoing monitoring of outsourced operations. The document should also specify the internal resources designated as outsourcing managers, whose professional profiles should be in line with this position.                   

Intermediaries using outsourced services are required to monitor the risks arising from outsourcing decisions, keep control of and remain responsible for outsourced operations, and retain the technical and management skills required to backsource them. It is understood that corporate boards and the heads of outsourced functions will remain responsible for the overall performance of those operations.

Can the Bank of Italy run specific checks on applicants as part of the licensing process?

The Bank of Italy may order an assessment of the overall viability of an applicant’s corporate structure and check the existence and the amount of its capital. For this purpose, it may use its own inspectors or request a third-party appraisal. Depending on the applicant’s line of business, the Bank may highlight additional points to be assessed and recorded in the assessment report.

When does the Bank of Italy remove an SGR, a SICAV or a SICAF from the asset manager register?

The Bank of Italy shall remove an asset manager from the register in cases where its licence is withdrawn or has lapsed.

Intermediaries wishing to renounce their licence shall notify the Bank of Italy accordingly. After consulting Consob, the Bank of Italy shall remove them from the register within 90 days of receipt of the notification.

Under what conditions does a licence lapse?

The Bank of Italy shall automatically declare that a company's licence has lapsed and shall remove it from the register if it has not started asset management operations within one year of licensing or if, having commenced asset management operations, it fails to engage in them for more than six months.

As for SICAVs and SICAFs, failure to set up the company or to pay up the initial subscribed capital within the 30-day time limit shall result in the licence lapsing.