ITALY Law and Practice Contributed by: Silvia Bordi, Emanuele Bosia, Federico Dettori and Rodrigo Boccioletti, Gianni & Origoni
Decision-making is typically centralised within the SGR, which exercises full discretion over investment and divestment decisions, though internal investment committees and advisory bodies may be involved for strategic guidance or investor alignment. Market-standard fund documentation includes the fund rules, the investment management agreement (if outsourced), and subscription agreements with investors, often incorporating limited partner (LP)-style terms adapted to the Italian regulatory context. Increasingly, Italian venture funds adopt international best practices – such as those inspired by the Institutional Lim - ited Partners Association (ILPA) Principles – to ensure alignment of interests and transparency with institutional investors. 2.2 Fund Economics In Italy, fund initiators, managers or principals typically participate in the economics of VC funds through management fees, carried inter - est and personal co-investments. Management fees, usually ranging from 1.5% to 2.5% of committed capital, cover operational expenses. Carried interest, typically around 20%, entitles fund principals to a share of the profits once a preferred return (or hurdle rate) is achieved for investors. Increasingly, fund managers are required to commit their own capital – known as general partner (GP) commitment – aligning their interests with those of limited partners. Over time, key market-standard terms have evolved to strengthen investor protection and governance within Italian VC funds. Investor advisory committees are commonly established, granting limited partners oversight rights on con - flicts of interest, valuation methodologies and material fund decisions. These committees also
review related-party transactions and extensions of fund life, reinforcing transparency. Preferred return structures or hurdle rates have become standard, ensuring investors receive a minimum return before managers participate in profits. Claw-back provisions are also typi - cal, requiring managers to return excess carried interest if fund performance drops below target levels after early distributions. Governance provisions now emphasise strong reporting obligations, quarterly updates and detailed disclosures to investors. Compliance with eESG principles is increasingly embedded in fund documentation, reflecting both investor expectations and alignment with EU sustain - ability regulations. Together, these mechanisms balance the entrepreneurial incentives of fund principals with robust investor protections in Italy’s VC landscape. 2.3 Fund Regulation VC funds in Italy are typically structured as closed-end alternative investment funds (AIFs) and are subject to specific regulation under both Italian law and the European Alternative Invest - ment Fund Managers Directive (AIFMD). Italian VC funds are commonly established as Fondi di Investimento Alternativi (FIAs), governed by the TUF and overseen by the Italian financial regu - lator, CONSOB, as well as the Bank of Italy for prudential supervision. Fund managers must obtain authorisation as AIFMs if they exceed certain asset thresholds, requiring them to comply with stringent report - ing, risk management and transparency obliga - tions. Smaller funds may benefit from lighter regulatory requirements if they fall below AIFMD thresholds. Additionally, funds’ marketing to
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