Investment Funds do not have Legal Personality

Decision n. 12062/2019 by the Italian Supreme Court, confirms a previous legal opinion

«Investment Funds (particularly close-ended funds that invest in real estate), under the Italian Financial Instruments Act (also known as T.U.F. or Legislative Decree n. 58/1998, in its consolidated version), are not juridical subjects, as they [merely] represent assets separated from the managing company. This Court has already stated such principle, considering that in the case of a real estate purchase (entered into for the interest of the Fund), such real estate will be assigned to the managing company (or the founding company) that is the absolute formal proprietor and is entitled to start any proceeding to protect the interests of the separated asset representing the fund actual substance (ref. Decision n. 16605/10 of this Court).»

These are the words used by Italian Supreme Court to re-state the principle denying autonomous juridical personality to Investment Funds (the particular case before the Court, involved a close-ended fund for real estate investments). The subject owner of the Fund asset will be the managing company, which is the only legal entity, being entitled to appear before the court.

However, such theory is not that widely accepted or undisputed. In fact, legal doctrine and Local Court decisions have positively stated the opposite principle. According to such opposite theory, at least the “patrimonial autonomy” may be acknowledged, based on the provision of article 36 paragraph 4 T.U.F. (see particularly the opinion stated by Court of Milan Decision n. 7336/2016), and therefore the possibility to have a full legal personality could be somehow admitted. By contrast, having the Supreme Court endorsed the no-personality theory (by Decision n.12062/2019), a new interpretation of article 36 T.U.F. as well as of article 57 par. 6.2 T.U.F. is deemed necessary.

Finally, we shall mention the existence in the European system, of a body called “European Investment Fund” (EIF). Despite such denomination, the EIF “has legal personality and financial autonomy”, according to its own statute.