C-366/97
ECLI:EU:C:1998:523
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ROMANELLI
OPINION OF ADVOCATE GENERAL FENNELLY delivered on 29 October 1998 *
I — Introduction taking up and pursuit of the business of credit 1 institutions (hereinafter 'the First Directive') state, in relevant part:
'Whereas measures to coordinate credit insti tutions must, both in order to protect savings 1. The request for a preliminary ruling in this and to create equal conditions of competition case arises from the criminal prosecution of between these institutions, apply to all of Massimo and Paolo Romanelli for the unlawful them; .... taking of savings from the public, and relates to the interpretation of the notion of deposits in Community banking law.
Whereas the scope of those measures should therefore be as broad as possible, covering all institutions whose business is to receive repay able funds from the public whether in the II — Legal and factual context form of deposits or in other forms such as the continuing issue of bonds and other compa rable securities and to grant credits for their own account; ....'
2. The fourth and fifth recitals in the Article 1 of the First Directive defines a credit preamble to the First Council institution as 'an undertaking whose business Directive 77/780/EEC of 12 December 1977 is to receive deposits or other repayable funds on the coordination of the laws, regulations from the public and to grant credits for its and administrative provisions relating to the own account.'
* Original language: English. 1 — OJ 1977 L 322, p. 30.
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3. The Second Council Directive 89/646/EEC deposits or otherwise'. Article 130 of the of 15 December 1989 on the coordination of Decree implements Article 3 of the Second the laws, regulations and administrative pro Directive by creating the offence of the visions relating to the taking up and pursuit unlawful taking of savings from the public, of of the business of credit institutions and which Massimo and Paolo Romanelli (here 2 amending Directive 77/780/EEC (hereinaf inafter 'the defendants') are accused before ter 'the Second Directive') defines a credit the Tribunale Civile e Penale (Civil and Crim institution, at Article 1(1), by reference to the inal District Court) di Firenze (hereinafter definition given in the First Directive. Arti 'the national court'). They are being pros cle 3 provides as follows: ecuted in their capacity as legal representa tives of the company Romanelli Finanzaria SpA.
5. The national court explains in its order for 'The Member States shall prohibit persons or reference that the offence is alleged, undertakings that are not credit institutions from carrying on the business of taking deposits or other repayable funds from the public. This prohibition shall not apply to the taking of deposits or other funds repayable by a Member State or by a Member State's '(a) in relation to the issue of trust securities regional or local authorities or by public consisting in the sale to third parties of international bodies of which one or more an instrument representing an amount Member States are members or to cases receivable and immediate advance repur expressly covered by national or Community chase thereof at a price which incorpo legislation, provided that those activities are rated the agreed interest; subject to regulations and controls intended to protect depositors and investors and appli cable to those cases.'
(b) in relation to the issue of warrants rep resenting an option to acquire deben tures issued by ... Romanelli Finanzaria SpA.'
4. The Second Directive was implemented in Italy by Legislative Decree No 385 of 1 Sep tember 1993 (hereinafter 'the Decree'). Arti The national court adds that 'the trust securi cle 11 of the Decree defines 'taking savings' as ties and debenture warrants in question ... are 'the acquisition of funds accompanied by an not financial instruments repayable by their obligation of reimbursement, in the form of intrinsic nature; they are repayable only as a result of contractual provisions'. It states that the notion of the taking of savings under the 2 — OJ 1989 L 386, p. 1. Decree can be interpreted either 'restrictive-
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ly ... as covering only those financial instru cle 3 of the Second Directive to instruments ments which inherently embody an obliga which intrinsically contain an obligation of tion of repayment', or 'extensively ... refer repayment. The 'other repayable funds' ring, conversely, also to financial instruments referred to in Article 3 should be understood in which the repayability derives from a spe as being analogous to deposits. The two Direc cific agreement'. In order to resolve its doubts tives are concerned with protecting credit about the proper construction of the Decree, capital rather than risk capital. Credit capital the national court has referred the following is typically provided to banks through deposits question regarding the interpretation of the which are, by their very nature, repayable. Second Directive, asking, Risk capital, on the other hand, is not invested on the basis of a guarantee of repayment, but in order to achieve speculative returns.
'[w]hether the expression "repayable funds" contained in Directive 89/646/EEC of 15 December 1989 refers only to financial instruments which possess the intrinsic char acteristic of repayability or whether that expression refers also to those financial instru ments which, although not possessing that intrinsic characteristic, are the subject of a contractual agreement to repay the amount paid.'
8. Austria, Belgium, Finland and the Com mission all argue that Article 3 of the Second Directive should be interpreted by reference III — Observations to the nature of a transaction as a whole. It should cover any transaction, however con structed, which includes an obligation of repayment of the funds invested. The fact that this obligation may arise from a contract which is formally distinct from the financial 6. Written observations were submitted by instrument in question is immaterial. The two the defendants, the Republic of Austria, the 3 Directives are to be read together. Thus, the Kingdom of Belgium, the Republic of Fin land and the Commission of the European definition of deposits and other repayable Communities. Oral observations were also funds is also central to the definition of a submitted by the defendants and the Com credit institution in both Directives. The object mission. of the Directives is, in part, to protect sav-
3 — The second recital in the preamble to the Second Directive 7. The defendants argue for a restrictive states that 'this Directive will join the body of Community legislation already enacted, in particular the First Council approach, confining the application of Arti Directive 77/780/EEC ...'.
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ings; 4 the achievement of this objective cise his option to acquire the debentures, the requires measures of broad scope, as is indi transaction would come within Article 3 of cated by the statement and list of instruments the Second Directive. in the fifth recital in the preamble to the First Directive and by Article 1(1) of 5 Directive 94/19/EC. Financial institutions are constantly devising new instruments and combinations of instruments to attract investors. If a narrow approach were taken, IV — Analysis such undertakings could avoid compliance with the Second Directive by devising savings transactions in which the deposit and repayment obligations were divided between two or more instruments or contractual agreements. This could distort competition 10. It is not necessary, in my view, to address and endanger depositors' savings. directly the character of the types of invest ment offered by the defendants. The Court has been provided with relatively little infor mation about them and the national court has referred a clearly defined question of prin ciple the answer to which, applied to the facts, should enable it to dispose of the case before it.
9. The Commission argues that the issuing of the trust securities in question in the present case is undeniably a form of collection of repayable funds, as they can be redeemed at any time for a price comprising both the 11. It is clear that one of the objectives of the 6 principal sum and interest. On the other Second Directive, as of the First Directive, is hand, it submits that the issue of warrants, the protection of savers. This emerges not representing an option to acquire debentures only from the express statements in the above- during a specified period and at a specified quoted recitals in the preamble to the First price, would not normally constitute the Directive, but also from the scheme of the taking of repayable funds. However, if the Second Directive itself, including Article 3. warrants were priced in such a fashion that Credit institutions are subjected to conditions the purchaser would inevitably be led to exer regarding authorisation and the pursuit of their business which ensure a certain harmo nised level of protection for depositors. It is noteworthy, in particular, that the prohibition 4 — Fourth recital in the preamble to the First Directive, cited above; Case C-222/95 Parodi v Banque H. Albert de Bary in Article 3 on the taking of deposits or other [1997] ECR I-3914, paragraphs 22 and 23; see also the first repayable funds from the public by persons recital in the preamble to Directive 94/19/EC of the Euro pean Parliament and of the Council of 30 May 1994 on or undertakings other than credit institutions deposit-guarantee schemes, OJ 1994 L 135, p. 5, which refers to increasing protection for savers. is subject to an exception in cases expressly 5 — Loc. cit. covered by national or Community legisla 6 — See Article 12, Council Directive 86/635/EEC of 8 December tion, provided that the activities in question 1986 on the annual accounts and consolidated accounts of banks and other financial institutions, OJ 1986 L 372, p. 1, are subject to regulations and controls which deals with the accounting treatment of sale and repur chase transactions. intended to protect depositors and investors.
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12. I agree with the defendants that the pro used, if the transactions, taken as a whole, hibition in Article 3 of the Second Directive, give rise to an obligation of repayment either and the definition of credit institutions, by on demand or at a point in time which is reference to the taking of deposits and other specified or can be specified by the investor. repayable funds and the granting of credit, in As has been pointed out by the Commission Article 1 of the First Directive, both rely upon and by the Member States which have sub an implicit distinction between credit and risk mitted observations, the fifth recital in the capital. This distinction is established by the preamble to the First Directive emphasises requirement that the funds invested be repay the need for measures of broad scope to pro able. However, I do not agree with the defen tect savings. Furthermore, the effectiveness of dants' conclusion that the distinction between Article 3 of the Second Directive could be credit and risk capital is reflected in practice, undermined by a formalistic insistence that for the purposes of the Directives, by a fur the financial instruments used in a transaction ther distinction between financial instruments involving, in reality, the making of deposits which are intrinsically repayable and those be intrinsically repayable. Thus, in principle, which are not. Whether a business consists in Article 3 should apply where a person or the 'taking of deposits or other repayable undertaking other than a credit institution funds from the public' should not, in my view, carries on the business of taking funds from depend on the form of financial instruments the public in such circumstances.
V — Conclusion
13. In the light of the foregoing analysis, I recommend that the Court answer the question referred by the Tribunale Civile e Penale di Firenze as follows:
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 undertak ings 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 .
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