ITALY Law and Practice Contributed by: Paolo Ludovici and Andrea Mirabella, Gatti, Pavesi, Bianchi, Ludovici
own them. Ownership, in fact, remains with the third party who has entrusted the fiduciary company. Depending on the type of business conducted, trust companies can be categorised into: • Fiduciary companies carrying out static administra - tion – these exercise administration and supervi - sion of the assets entrusted by the client, while complying with the instructions given by the client for each transaction; and • Fiduciary companies carrying out dynamic admin - istration – these manage assets, being granted broad discretionary powers over those assets (eg, they can dispose of assets, purchase others and reinvest any profits earned). Fiduciary companies need special authorisation, issued by a Ministerial Decree of the Ministry of Eco - nomic Development and with the favourable opinion of the Ministry of Justice (in the presence of the require - ments of Ministerial Decree of 16 January 1995). Also, the Ministry of Economic Development carries out supervision activities on fiduciary companies. Fiduciary companies engaged in the custody and administration of securities are required to be regis - tered in a special section of a register kept at the Bank of Italy and are subject to supervision by the Bank of Italy. This entails being subject to several internal control requirements, with specific reference to anti- money laundering regulations. Trust Companies In Italy, trust companies specialise in establishing and managing trusts by providing trustee services in a pro - fessional manner. The activity of trustees is not regulated and can also be carried out by non-professional trustees. 6.2 Fiduciary Liabilities Fiduciary Companies Ministerial Decree of 16 January 1995 states that the clauses of the fiduciary mandate shall mandatorily provide for, inter alia:
• liability for the fiduciary company’s breach of duty as governed by the rules of the Italian Civil Code on diligence in the performance of obligations and the diligence of the mandatary (the mandatary is required to execute the mandate with the diligence of a good father of a family); and • the obligation of the fiduciary company to be responsible for the actions of its collaborators whose services the principal authorises it to use in the performance of the assignment. In addition, fiduciary companies are subject to super - vision by the competent authorities (see 6.1 Preva- lence of Corporate Fiduciaries ). Trust Companies The liability of the trustee may differ depending on the governing law of the trust chosen. It is common for specific provisions to be included in the trust deed to exempt the trustee from liability in the event of loss of the trust fund not attributable to the trustee’s miscon - duct or breach of trust, as well as the use of indem - nities for the trustee in case of final distribution and termination of the trust or change of trustee. 6.3 Fiduciary Regulation Fiduciary Companies Except for the obligations and requirements described in the previous sections 6.1 Prevalence of Corporate Fiduciaries and 6.2 Fiduciary Liabilities , Italian legis - lation does not provide for an ad hoc regulation con - cerning investment of assets by fiduciary companies. The relationship between a principal and a fiduciary company is regulated by a contractual agreement con - taining instructions as to the type of investments that can be made and the way the assets are managed. This last aspect will depend on the type of mandate granted, ie, static or dynamic (see 6.1 Prevalence of Corporate Fiduciaries ). Trust Companies Usually, the trust deed and the governing law contain regulation on how the trust assets shall be invested. 6.4 Fiduciary Investment Fiduciary Companies Usually, assets administered include mainly securities, financial instruments and foreign insurance policies. It
304 CHAMBERS.COM
Powered by FlippingBook