In the last few years, the Italian Government reformed the
Italian debt market with the aim of facilitating access by Italian
businesses to financings. Going along this reformation path, the
Italian Council of Ministers enacted Law Decree No. 18 of February
14, 2016 (the "Law Decree"),1 which, inter
alia, completed the set of "level one" rules
applicable to direct lending in Italy by Italian and EU non-Italian
alternative investment funds.
The Law Decree sets the conditions at which Italian and EU
non-Italian alternative investment funds may operate in Italy as
alternative direct lenders.
Italian Alternative Investment Funds
Italian investment funds may carry out direct lending activities
in Italy toward borrowers other than consumers, provided that:
They qualify as alternative
investment funds pursuant to the AIFM Directive2 as
implemented into Italy;
They are formed as closed-ended
They cannot employ leverage in excess
The aggregate amount financed by the
fund to the same borrower cannot exceed 10 percent of the total
assets of the fund; and
They cannot grant financings with a
duration exceeding the fund's term.
Italian alternative investment funds participate in the Central
Credit Register (Centrale Rischi) managed by the Bank of
Italy. The Bank of Italy may allow such a participation on an
indirect basis as well, through authorized banks or financial
intermediaries acting as service providers.
EU Alternative Investment Funds
EU non-Italian alternative investment funds may carry out direct
lending activities in Italy toward borrowers other than consumers,
They are authorized to carry out
direct lending activities in their home country by their home
country competent authorities;
Their basic structure of operation is
substantially similar to that of Italian closed-ended funds;
They are bound by the same limits on
leverage and risk diversification as the Italian funds (see above),
based on either their home country law or their bylaws.
EU non-Italian alternative investment funds intending to carry out
direct lending activities in Italy must notify the Bank of Italy
and may start lending after the following 60 days if no objection
is raised by such authority.
The Bank of Italy may require EU non-Italian alternative investment
funds to participate, directly or indirectly, through authorized
banks or financial intermediaries acting as services providers, to
the Central Credit Register managed by it.
The contractual documentation relating to financings granted by
both Italian and EU non-Italian alternative investment funds will
be drafted in accordance with the transparency requirements
applicable to banks and financial intermediaries under the Italian
Banking Law and the relevant implementing regulation.
1 The Law Decree was published in the Italian Official
Gazette No. 37 of February 15, 2016, and it has been in force since
the day immediately following its publication (i.e., February 16,
2016). Please note that the Law Decree must be converted into law
within 60 days from the date of its publication in the Italian
Official Gazette; otherwise, it will cease to be effective with
retroactive effect. In this respect, please note that amendments to
the Law Decree may be made by the Parliament during the conversion
2 Directive 2011/61/EU of June 8, 2011 on alternative
investment funds managers.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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