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Criminal Procedure v Massimo Romanelli and Paolo Romanelli Essay

Criminal Procedure v Massimo Romanelli and Paolo Romanelli

Criminal proceedings on February 11, 1999 in Florence against Messrs Massimo and Paolo Romanelli, who acted in capacity as legal representatives of Romanelli Finanzaria SpA, was brought for the unlawful taking of savings from the public.

Directive 89/646 was implemented in Italy by a legislative decree which consolidated the legislation adopted in the field of banking and credit. Article 11(2) of the Decree prohibits undertakings other than banks from taking savings from the public, and that activity is defined in Article 11(1) as ‘the acquisition of funds accompanied by an obligation of reimbursement, in the form of deposits or otherwise‘.

In 1994 and 1995 Messrs Massimo and Paolo Romanelli issued trust securities consisting in the sale to third parties of an instrument representing an amount receivable and immediate repurchase thereof at a price which incorporated the agreed interest, and warrants representing an option to acquire debentures issued by Romanelli Finanzaria SpA.

According to the order for reference, the term ‘taking of savings‘ in Legislative Decree No 385 can be interpreted in two ways: either it refers only to those financial instruments which, by their intrinsic nature, embody an obligation of repayment, or it covers in addition

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those financial instruments in which the requirement of repayability derives from specific contractual provisions.

The banking sector is a particularly sensitive area from the point of view of consumer protection. Consumers must be protected against the harm which they could suffer through banking transactions effected by credit institutions disregarding the requirements relating to their solvency or whose managers do not have the necessary professional qualifications or integrity.

Thus, as is clear from Directives 77/780 and 89/646, the protection of savings constitutes one of the objectives of the measures taken to coordinate credit institutions.

The term credit institutions refers to an institution covered by the definition contained in Article 1 (1) of Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions, as amended by Directive 2000/28/EC of the European Parliament and of the Council of 18 September 2000. Thus, a credit institution is: (i) an undertaking whose business is to receive deposits or other repayable funds from the public and to grant credits for its own account; or (ii) an undertaking or any other legal person, other than those under (i), which issues means of payment in the form of electronic money.

Accordingly, the prohibition, in the case of persons or undertakings that are not credit institutions, on carrying on the business of taking deposits or other repayable funds from the public, which is laid down in Article 3 of Directive 89/646, must be interpreted in such a way as to apply to financial instruments in which the requirement of repayability derives from a contractual provision.

A narrower interpretation, as contended for by the defendants in the main proceedings, would undermine the objective of protecting consumers against the harm which they could suffer through financial transactions.

Thus the Court’s reply was that Article 3 of the Second Council Directive 89/646/EEC of 15 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions and amending Directive 77/780/EEC should be interpreted as prohibiting all persons or undertakings other than credit institutions from carrying on the business of taking deposits or other repayable funds from the public even where the obligation to repay arises not from the intrinsic characteristic of repayability of the instruments used but from a contractual agreement.

Reference:

Clarotti, P. The Harmonization of Legislation Relating to Credit Institutions. CMLRev. – 1982, P. 245, 266-267.

Gruson M., Feuring W. «A European Union Banking Law: the Second Banking and Related Directives» in The Single Market and the Law of Banking, ed. by Cranston R. London: LLP – 1995, ?. 27-28.

Difusi?n Selectiva de la Informaci?n on <http://www.cde.ua.es/dsi/feb99db.htm>

Credit Institution, European Central Bank Glossary, June 8, 2005 <http://www.ecb.int/home/glossary/html/glossc.en.html#skipnavigation>

Official Journal of the European Communities C100/7 April 10, 1999 on <http://www.europa.eu.int>

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