- Supervisory Authorities Publish Enforcement Criteria for the New Interlocking Prohibition
- May 21, 2012
- Law Firm: Norton Rose Canada LLP - Montreal Office
In December 2011, the Italian Government enacted an “interlocking prohibition” under article 36 of the Italian Legislative Decree no 201 of 6 December 2012, the so-called “Salva Italia” Decree (the Decree). Pursuant to that article, persons who are members of management, supervisory and controlling bodies or top managers of a company or group (the “Relevant Person”) operating within the financial services markets (either in the credit, investment or insurance sector) are prohibited from taking on similar roles in competing companies or groups carrying out the same business, except for those companies or groups which are connected by relationship of control, as defined under Italian competition law (i.e. interlocking positions).
If a Relevant Person holds conflicting offices falling foul of the interlocking provision, he has a 90 day period to opt to remain in one position or the other. If a decision is not made, they will automatically lose office in both of the competing companies and the termination will be declared within 30 days from the date of termination by the company. In the event the involved companies fail to comply with the above, then the competent supervisory authority (the Bank of Italy, the Italian securities exchange commission, CONSOB and the Italian insurance market supervisory authority, ISVAP) shall declare the Relevant Person forfeited from the offices.
On 20 April 2012, the above mentioned supervisory authorities published a joint position paper which: explains in detail the rationale of the interlocking prohibition; provides a list of criteria for the enforcement of the same; and indicates the relevant regulations to be applied for each financial sector in the context of the application and interpretation of the interlocking prohibition.
The interlocking prohibition is aimed at preventing that same Relevant Persons hold strategic offices in several competing companies, which have been considered by the Italian legislator an issue of significant relevance in Italy, especially in the financial services sector in that they tend to distort competition and hinder the development of Italian financial markets.