Weekly newsletter - year 16 - no. 10 - 8 March 2010

News of the week:
Protection of investors: notices 
Joint Bank of Italy-ISVAP paper
Conciliation Chamber: articles of association and code approved
Short selling: CESR recommendation
Commitment to squeeze-out on Banca Italease shares
Ratti rights offering and listings
Credito Cooperativo di Mediocrati bonds
Banca di Credito Cooperativo di Roma bonds 

Commission decisions

N.B. measures adopted by Consob are published in the Bollettino and, where envisaged, also in the Gazzetta Ufficiale. This newsletter summarises the more important or general measures and their disclosure here is therefore merely to update readers on Commission activities.

- NEWS OF THE WEEK- 

PROTECTION OF INVESTORS: NOTICES 

The Commission bancaire financière et des assurances (CBFA), the Belgian supervisory authority, reports that Pell Futures with declared headquarters in Hong Kong, and Warwick Ventures with declared headquarters in the Cayman Islands and offices in the Bahamas, Cyprus and Tokyo are offering investment services without the required authorisation. 

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The Danish supervisory authority (DFSA), reports that Dai-ichi Securities, with declared headquarters in Tokyo, is offering investment services without the required authorisation.

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The Autorité des Marchés Financiers (AMF), the French supervisory authority, reports that Global International Trading, with declared headquarters in Japan, is offering investment services without the required authorisation.
This company was previously reported by the Dutch authority (see "Consob Informs" 34/2009)

JOINT CONSOB-BANK OF ITALY-ISVAP PAPER ON IAS/IFRS APPLICATION

In a joint paper on IAS/IFRS application disseminated by the three authorities’ coordination committee on 3 March, Consob, the Bank of Italy and ISVAP have repeated the need for members of boards of directors and internal control bodies of listed companies, insurance companies, banks and finance companies, along with executives with special office, to ensure that their financial reports are suitable and clearly, fully and promptly indicate the risks and uncertainties to which the company is exposed, their equity to cover such events and their real capacity to generate income.

A reading of the financial statements as at 31 December 2008 and other financial reports published during 2009 it emerges in fact that, despite certain improvements, there are still a number of information shortcomings in areas most sensitive to the impact of the crisis. Though there are signs of improvement in the economic situation, the forecasts are still considerably uncertain. This could affect a company’s fundamentals and consequently the main items of the balance sheet. 

This joint paper follows that issued in February 2009 by the three authorities to draw the “attention of boards of directors and internal control bodies to the need to guarantee that information provides a clear picture of the impact of the crisis on the financial position, operating decisions and strategic decisions formulated and any corrective measures implemented to adapt the business strategy to the changing reference context. In other words, an appropriate level of reporting transparency can contribute to decreasing uncertainty and its negative consequences”.

The paper has no enforceable content per se, in that it introduces no new disclosure obligations over and above those envisaged in IAS/IFRS, but does identify certain information areas in which companies must ensure a higher degree of transparency, i.e.: (i) impairment testing, assessment of other intangible assets with an indefinite useful life and equity investments; (ii) the assessment of equity securities classed as “available for sale”; (iii) the classification of financial liabilities when failure to comply with contractual clauses results in loss of the post-contractual benefit.  It also specifies certain points on the information to be provided in relation to debt rescheduling and indicates the new disclosure obligations concerning the “fair value hierarchy”.

The paper is available on the web sites of the three authorities. www.bancaditalia.it, www.consob.it and www.isvap.it.

CONCILIATION AND ARBITRATION CHAMBER: ARTICLES OF ASSOCIATION AND CODE OF ETHICS APPROVED

By resolutions 17204 and 17205 of 4 March 2010 the Commission approved the articles of association of the Conciliation and Arbitration Chamber and the code of ethics for conciliators and arbitrators previously adopted by the Chamber through its own resolutions no. 2 and no. 3 of 10 and 18 February 2009, submitted to Consob for final approval.

The articles of association comprise 20 articles and contain the Chamber’s organisation and operating regulations. Specifically, they identify the control bodies (chairman, panel and secretariat) and their related duties, the terms of office of members and the procedure to be adopted by the Chamber in order to pronounce lapse in cases envisaged in the regulations or ascertainment of other office termination scenarios; the method for calling and conducting meetings; regulations regarding the confidentiality of panel business and the recording of awards made.

The code of ethics comprises 8 articles, respectively concerning the rules common to both conciliators and arbitrators, rules specific to conciliators and rules specific to arbitrators. These rules express a number of principles on matters of independence, impartiality, fairness, loyalty, confidentiality, operations, professionalism, efficiency and economics that those to whom the code is addressed are expected to abide by, together with provisions of a prescriptive nature regarding conduct to be adopted or avoided in individual proceedings.

The approval of these documents is preliminary to the system’s full operations. Following approval of the articles of association governing its organisation and operations, the Chamber can now take action in reference to remaining preliminary obligations, first and foremost training of the lists of conciliators and arbitrators needed to be able to effectively announce availability of these new dispute settlement means to investors.

SHORT SELLING: CESR RECOMMENDATION FOR THE INTRODUCTION OF A EUROPEAN TRANSPARENCY REGIME

The CESR (Committee of European Securities Regulators), supervisory authority coordinator and financial markets regulator in the European Union of which Consob is a member, has issued a position paper to European authorities recommending the introduction of a pan-European transparency regime for short selling.

The paper (Ref. CESR/10-088) asks that supervisory authorities that have already adopted transparency measures on short selling arrange their full implementation. Other authorities are invited to implement transparency rules as fully as possible pending the launch of a European measure on short selling.

The CESR accepts that short selling plays an important role in the financial markets in that it contributes to ensuring pricing efficiency, increases market liquidity, facilitates hedging and risk management and can mitigate the effects of speculative bubbles. However, the CESR considers that short selling can also be used manipulatively to lower share prices and, in extremely severe market conditions, can have a negative impact on financial stability. The recent global crisis of the financial markets highlighted the need to introduce short selling regulations. The CESR paper therefore envisages a short selling disclosure regime to ensure that, through a common European regulation, an adequate level of transparency for investors is achieved. Nevertheless, the CESR does not exclude the option of adopting further measures and offers its members the option of adopting restrictive measures in specific market conditions.

Following a widescale consultation process that began in July 2009, the CESR proposes a two-threshold transparency regime for individual short sales of shares admitted to trading in the EEA on regulated markets and on MTFs. The regime proposed by the CESR envisages that the relevant supervisory authority is informed when a 0.2% threshold in short positions is reached. The disclosure obligation also applies to every increase of 0.1%. When short positions exceed 0.5% - and for every 0.1% increase thereafter – disclosure to both the supervisory authority and the market is compulsory. For calculation purposes, all open positions on a given share, including those in ETFs and derivatives, must be aggregated. The disclosure must be issued by the end of the day after that on which the significant threshold is exceeded. The obligation does not apply to market makers.

The full CESR text and consultation results are available on the web site www.cesr.eu.

PRICING OF THE COMMITMENT TO SQUEEZE OUT ON BANCA ITALEASE SHARES AND PUBLICATION OF THE PROSPECTUS

Consob has established a price of 0.797 euro per share for the commitment to squeeze out, pursuant to art. 108, subsection 2 of the Consolidated Law on Finance, by Banco Popolare Soc. coop. on ordinary Banca Italease spa shares.

Following the voluntary takeover bid held in the period 14 May-1 July 2009 and on closure of the subscription period on 8 January 2010 for new Banca Italease shares issued as part of the share capital increase, Holding Banco Popolare’s total investment reached 91.397% of ordinary Banca Italease share capital, therefore triggering the commitment to squeeze out on the remaining company shares.

Taking into consideration information submitted by the bidder and the declaration from the independent auditors, the price calculation, performed in accordance with art. 50, subsection 4 of the Issuers’ Regulation, attributed a limited weighting (20% to the previous bid price (1.50 euro, corrected to 0.616 euro after share capital increase effects) given both the opinion expressed by the market and the length of time passed. A significant weighting (50%) was given to the average market price in the last six months in view of the level of trading. Lastly, a 30% weighting was attributed to current performance and business outlook. The performance and earnings prospects parameter was not calculated given the absence of a business plan approved by the relevant boards of directors and the negative performance of the issuer.

At the same time, the Commission authorised publication of the document concerning Banco Popolare’s commitment to squeeze out on Banca Italease shares.  The bid involves 159,362,216 ordinary shares, representing 8.603% of the issuer share capital.

The transaction forms part of the Banca Italease restructuring and reorganisation plan and aims at delisting of the issuer, as declared by the bidder when launching the voluntary takeover bid and confirmed in the disclosure of 12 January.  If at least the 95% threshold is not reached as a result of the commitment to squeeze out procedure, Borsa Italiana will order the delisting of ordinary Banca Italease shares with effect from 1 April 2010. If the 95% threshold is exceeded, the procedure according to art. 108, subsection 1 of the Consolidated Law on Finance will apply, i.e. squeeze out and mandatory takeover at the same price, 0.797 euro. In this case Banca Italease shares will be suspended and delisted with effect from 8 April 2010.

The new subscription period will begin on 8 March 2010 and end on 26 March, provided that information on the price, total countervalue of the transaction and guarantees is included in the prospectus. The “Warnings” section of the document includes essential information on the transaction and elements useful in assessing the offer.

RIGHTS OFFERING AND LISTING OF RATTI SHARES

Authorisation has been given for publication of the prospectus concerning the rights offering and listing on the MTA market of 39,000,000 ordinary Ratti spa shares and the listing of 182,500,000 shares issued by Ratti as part of a reserved share capital increase.
Ratti heads a group operating in the production and marketing of fabrics and the distribution of packaged products.

As at the date of the prospectus, shareholders with an investment with voting rights of over 2% of share capital are: Donatella Ratti (majority shareholder of 49.7%), Sofist spa – Società Finanziaria Sviluppo Tessile spa (8.5%); Mediobanca – Banca di Credito Finanziario spa (5.5); Luigi Turconi (2.3%).

The share capital increase optioned aims mainly to reconstitute the capital following its reduction to cover 2009 losses, whilst the reserved share capital increase is to rebalance the company’s equity and financial position.

The rights offering consists in a non-divisible share capital increase against payment for a total 4,446,000 euro, including share premium, via the issue of 39,000,000 new ordinary Ratti shares without a face value, offered on option to shareholders at the price of 0.114 euro each, including 0.076 euro share premium, in the ratio of 3 new shares for every 4 held. Any shares not subscribed will be offered on the market pursuant to art. 2441, subsection 3 of the Italian Civil Code.

Donatella Ratti is committed to exercising option rights on her own share and to subscribe any shares remaining unoptioned after the market offering.
The reserved share capital increase consists in a non-divisible share increase against payment, excluding option rights, for a total of 20,805,000 euro including share premium, via the issue of 182,500,000 new ordinary Ratti shares without face value at an issue price of 0.114 euro each, including 0.076 euro share premium.

Under the terms of a framework agreement signed on 30 October 2009 by the company and Donatella Ratti on the one hand, and by Faber Five srl and Marzotto spa on the other, the reserved share capital increase will be subscribed in equal amounts by Marzotto and Faber Five, each of which will then hold 33.364% of the company, whilst the respective investments of Donatella Ratti and Sofist will be 11% and 1.9%.
The reserved share capital increase will be subscribed before the start of the rights offering and will have a 78% diluting effect.

In relation to the share capital increases (rights offering and reserved), the provisions of art. 49, subsection 1, paragraph b) of the Issuers’ Regulation (company crisis, debt restructuring and subscription to share capital increases triggering a takeover bid) are met, and therefore the bail-out exemption from takeover bid regulations pursuant to art. 106 of the Consolidated Law on Finance applies (see “Consob Informs” no. 1/2010).

In the "Risk Factors" section, the prospectus indicates elements of risk to the investor with regard to the transaction, the issuer and the related business sector.

PUBLIC SUBSCRIPTION OFFER: CREDITO COOPERATIVO MEDIOCRATI BONDS

Authorisation has been granted for publication of the prospectuses concerning the public offering of “Credito Cooperativo Mediocrati Subordinato Lower Tier II 26/02/2010 – 26/02/2017 Tasso Step Up con ammortamento periodico” and “Credito Cooperativo Mediocrati Subordinato Lower Tier II 15/03/2010 – 15/03/2017 Tasso Step Up con ammortamento periodico” bond loans issued by Credito Cooperativo di Mediocrati sc.

The issuer, a cooperative established in 1999, provides typical savings deposit and credit facility services in their various forms in the Calabria region. The bank, unrated, does not belong to any group pursuant to art. 60 of the Consolidated Law on Banking.

The two bond loans have the same financial characteristics, the only differences between them being the total offering, due date and maturity date, though both have a 7-year term. The “Credito Cooperativo Mediocrati Subordinato Lower Tier II 26/02/2010-26/02/2017 Tasso Step Up con ammortamento periodico” loan relates to 6,000 bonds issued on 26 February 2010 maturing on 26 February 2017 with a face value of 1,000 euro each, for a total of 6 million euro. The “Credito Cooperativo Mediocrati Subordinato Lower Tier II 15/03/2010-15/03/2017 Tasso Step Up con ammortamento periodico” loan relates to 9,000 bonds to be issued on 15 March 2010 and maturing on 15 March 2017 with a face value of 1,000 euro each, for a total of 9 million euro. Both bond loans will be offered at 100% of the face value, with a minimum subscription of 5,000 euro.

The securities offered are subordinated Lower Tier II liabilities and, in the event of issuer winding-up or bankruptcy, the bond-related debt will be repaid only after all lower level creditors have been reimbursed.

The bonds for both loans offered will be repaid from year 3 in five annual instalments of equal amounts of 20% of the capital invested. They offer the right to payment of step up annual coupons with a gross rate of 4% for the first two years, 4.5% for the third and fourth years, and 4.50% for the fifth, sixth and seventh years on a half-yearly basis.  
The bonds are issued and 100% placed on Italian markets only and are indiscriminately offered to both the bank’s retail customers and to any interested professional and/or qualified investor. The offer forms part of typical funding activities for the provision of credit facilities to the bank’s shareholders and customers, and also certain regulatory capital requirements.

The issuer has specified that no request will be made for listing of the securities on regulated markets and that MTF trading is not envisaged.  In addition, the issuer is not committed to trading the bonds on its own account, thereby making it impossible for a subscriber to dispose of the securities prior to maturity.

In the "Risk Factors" section, the prospectus indicates elements of risk to the investor with regard to the issuer and the financial instruments offered.

So that potential investors can reach a more reasoned decision, the prospectus includes a table containing a breakdown of the securities’ issue prices and a table containing the probability scenarios of return on the investment over a time horizon corresponding to the term of the securities.

PUBLIC SUBSCRIPTION OFFER: BANCA DI CREDITO COOPERATIVO DI ROMA BONDS

Authorisation has been given for publication of the prospectus concerning the public offering of the “B.C.C. di Roma Obbligazione Subordinata Lower Tier II Tasso Fisso 4,00 % 08/03/2010 – 08/07/2015” bond loan issued by Banca di Credito Cooperativo di Roma sc.

The issuer, a cooperative established in 1954, provides typical savings deposit and credit facility services in their various forms. The bank’s share capital as at 30 June 2009 totalled over 4.2 million euro, divided into 1,629,904 shares with a face value of 2.58 euro each. No shareholders have a controlling interest.

The offering involves 60,000 bonds with a unit par value of 1,000 euro each, for a total bond loan value of 60 million euro. The bonds will be issued on 8 March 2010 with a maturity of 8 July 2015 and will be offered at the subscription price of 100.10% of their face value, equal to the issue price (100% of face value) plus subscription commissions (0.10%).
The securities offered are subordinated Lower Tier II liabilities and, in the event of issuer winding-up or bankruptcy, the bond-related debt will be repaid only after all lower level creditors have been reimbursed.

The bonds will be redeemed at par on maturity in a lump sum and offer half-yearly coupon payments at a fixed gross annual rate of 4%. The offer, in Italy only, is reserved solely to the bank’s customers. To participate, the subscriber must first open a current account and sign a securities custody agreement with the issuer. The offer forms part of typical funding activities for the provision of credit facilities and is also for bank capitalisation purposes.

The issuer has specified that no request will be made for listing of the securities on regulated markets and that MTF trading is not envisaged.  In addition, the issuer is not committed to trading the bonds on its own account, thereby making it impossible for a subscriber to dispose of the securities prior to maturity.

In the "Risk Factors" section, the prospectus indicates elements of risk to the investor with regard to the issuer and the financial instruments offered.

So that potential investors can reach a more reasoned decision, the prospectus includes a table containing a breakdown of the securities’ issue prices and a table containing the probability scenarios of return on the investment over a time horizon corresponding to the term of the securities.

- COMMISSION DECISIONS -
(the documents with a link are already available on the Internet in Italian at www.consob.it; the other measures will be posted in the next few days)

Regulations, guidance and communications

• Articles of Association of the Conciliation and Arbitration Chamber and the code of ethics for conciliators and arbitrators approved (resolutions 17204 and 17205 of 4 March 2010)

Takeover bids and exchange tender offers

• Price calculated for the commitment to squeeze out, pursuant to art. 108, subsection 2, Italian Legislative Decree 58/98, on Banca Italease shares by Banco Popolare sc (resolution no. 17206 of 4 March 2010). Authorisation for publication of the supplementary document by which Banco Popolare sc fulfils disclosure requirements regarding the commitment to squeeze out, pursuant to art. 108, subsection 2, Italian Legislative Decree 58/98, on ordinary Banca Italease shares (decision of 4 March 2010).

Prospectuses

• Authorisation for publication of the prospectus concerning the rights offering and listing on the MTA market of 39,000,000 ordinary Ratti spa shares and the listing of 182,500,000 shares issued by Ratti as part of a reserved share capital increase (decision of 2 March 2010).
  
  
• Authorisation for publication of the prospectus concerning the public offering of the “Bcc di Roma Obbligazione Subordinata Lower Tier II Tasso Fisso 4,00% 08/03/2010-08/07/2015” bond loan issued by Banca di Credito Cooperativo di Roma sc (decision of 2 March 2010).
  
  
• Authorisation for publication of the registration document, securities notes and summaries concerning the public offering of “Credito Cooperativo Mediocrati Subordinato Lower Tier II 26/02/2010 – 26/02/2017 Tasso Step Up con ammortamento periodico” and “Credito Cooperativo Mediocrati Subordinato Lower Tier II 15/03/2010 – 15/03/2017 Tasso Step Up con ammortamento periodico” bond loans issued by Credito Cooperativo di Mediocrati sc (decision of 2 March 2010).
  
  
• Authorisation for publication of the base prospectus concerning the public offering programme of fixed rate, floating rate, step up/step down and one-coupon bonds issued by Banca di Credito Cooperativo di Ostra e Morro D’Alba sc (decision of 2 March 2010).
  
  
• Authorisation for publication of the securities notes and summaries concerning the public offering programmes of fixed rate, floating rate, step up/step down, step up callable/step down callable and zero coupon bonds issued by Banca Monte dei Paschi di Siena spa (decision of 2 March 2010).
  
  
• Authorisation for publication of the securities notes and summaries concerning the public offering programmes and/or listing of certificates issued by Banca Aletti & C spa (decision of 2 March 2010).
  
  
• Authorisation for publication of the supplement to the registration document and base prospectus concerning the public offering programmes of fixed rate, floating rate and step up bonds issued by Banca di Credito Cooperativo di Manzano sc (decision of 2 March 2010).

Listed Issuers

• Equivalence confirmed regarding the document disclosing the partial and proportionate reverse spin-off of Intek spa in favour of the KME Group spa.  The information contained in the merger document, published pursuant to art. 70, subsection 4 and art. 71 of the Issuers’ Regulation, integrated with supplementary and subsequent information, was considered equivalent to meeting the disclosure requirements for listing prospectuses pursuant to Regulation 809/2004/EC. The company is therefore exempt from mandatory publication of a prospectus for the admission to trading of new KME Group spa ordinary shares, savings shares and warrants used for spin-off exchange purposes (decision of 2 March 2010).

Registers and lists

• Authorisation granted to Solutions Capital Management Sim spa for the provision of portfolio management, order receipt and transmission and investment advisory services pursuant to art. 1, subsection 5, paragraphs d), e) and f), Italian Legislative Decree 58/1998 and for inclusion of the company in the investment firm register pursuant to art. 20, subsection 1 of said decree. Authorisation is granted with the following operating limits: “without holding, even on a temporary basis, cash and cash equivalents or financial instruments of customers and with no assumption of risk by the company” (resolution no. 17202 of 2 March 2010).
  
  
• Cancellation of authorisation granted to Popolare Bari Servizi Finanziari Sim spa (in liquidation) for the provision of investment services without firm or standing commitment to the issuer and investment advisory services pursuant to art. 1, subsection 5, paragraphs c-bis) and f) of Italian Legislative Decree  58/98, with subsequent cancellation of the company from the list of investment firms pursuant to art. 20, subsection 1 of said decree (resolution no. 17203 of 2 March 2010).
  
  
• Disqualification of Vito Antonicelli Parco, resident in the province of Bari, from the register of financial salesmen (resolution no. 17134 of 20 January 2010).
  
  
• Disqualification of Mauro Luigi Bracchi, resident in the province of Lodi, from the register of financial salesmen (resolution no. 17138 of 20 January 2010).
  
  
• One-month suspension from the register of financial salesmen as a disciplinary measure against Daniele Polti, resident in the province of Savona (resolution no. 17136 of 20 January 2010).
  
  
• Four-month suspension from the register of financial salesmen as a disciplinary measure against Gerardo Raccuia, resident in the province of Potenza (resolution no. 17154 of 2 February 2010).
  

CONSOB INFORMS (Rome Tribunal Registration no. 575 of 23/12/94) – Chief Editor: Alberto Aghemo - Editorial board: Antonella Nibaldi (coordinator), Laura Ferri, Claudia Amadio, Augusto Marciano, Claudia Paladini, Sante Vagnarelli - Text and layout: Alfredo Gloria, Piergiorgio Morandi - Address: CONSOB Via G. B. Martini, 3 - 00198 Rome - telephone: (06) 84771 - fax: (06) 8417707. Documents or reports can be submitted via the interactive section of the web site www.consob.it, where CONSOB INFORMA can also be consulted via the "newsletter" link.