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03 June 2005
Given that June 30 2005 is the deadline for amending the bylaws of cooperative banks, on April 2 2005 the Bank of Italy interpreted the applicability of the Corporate Law Reform 2003 to cooperative banks.
The interpretation refers to Legislative Decree 310/2004, which amended the Banking Law 1993 to determine which provisions of the Corporate Law Reform apply to cooperative banks.
Based on the different purposes of the two types of cooperative banks in Italy - popular banks and cooperative credit banks - the decree establishes that cooperative credit banks must adopt in their bylaws, among other things, the following provisions of the Corporate Law Reform:
Cooperative credit banks shall also grant credit primarily to their members
in compliance with Article 35 of the Banking Law.
The decree states that these provisions will not apply to popular banks; nor will the right of prior authorization granted to the board of directors by Article 2530 of the Civil Code in case of the transfer of shares.
The decree further enables cooperative banks to benefit from different models of corporate governance introduced by the Corporate Law Reform and the ability to issue special categories of shares.
The decree also states that some provisions of the Corporate Law Reform do not apply to cooperative banks (which remain subject to the Banking Law and regulations enacted by the Bank of Italy) - in particular, those concerning:
On the basis of the new provisions set down by the decree, the Bank of Italy clarified that popular banks and cooperative credit banks must promptly amend their bylaws in accordance with the amended mandatory provisions of the Corporate Law Reform. The Bank of Italy recommended that cooperative credit banks adopt mutual clauses under Article 2514 of the Civil Code, in particular the clause providing limits to the remuneration of financial instruments offered for subscription to members. In addition, with regard to amendments concerning internal accounting audits, the Bank of Italy recommended that banks choose whether to keep this duty under the competence of the board of auditors (according to Article 52, Paragraph 2(2) of the Banking Law) or assign it to an external adviser with professional skills.
Finally, with regard to the supervisory obligations of Article 56 of the Banking Law (notification to the Bank of Italy of any amendment to the bylaws), the Bank of Italy has clarified that cooperative banks need not notify it in advance of amendments made in compliance with the mandatory provisions of the Corporate Law Reform. In addition, cooperative credit banks need not notify in advance any amendment which complies with the provisions of the new standard bylaws, the revision of which was drafted by the Italian Association of Cooperative Banks in collaboration with the Bank of Italy. However, popular banks listed on a regulated market may not omit this requirement with regard to the specific provisions of the Civil Code and the special laws applicable to them.
For further information on this topic please contact Livio Esposizione or Laura Mannino at Studio Legale Tonucci by telephone (+39 06 36 22 71) or by fax (+39 06 323 5161) or by email (firstname.lastname@example.org).
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