ITALY Law and Practice Contributed by: Guido Alberto Inzaghi, Ivana Magistrelli, Silvia Gnocco and Gabriele Paladini, SI – Studio Inzaghi
3.5 Legal Requirements Before an Entity Can Give Valid Security The granting of security over real estate assets in favour of third parties, within a group of companies, is always subject to the existence of a corporate ben - efit and to certain restrictions in financial assistance situations. Corporate benefits should exist and be verified on a case-by-case basis. In the case of joint stock companies, financial assis - tance is generally prohibited, but it is possible to pro - vide security over real estate assets subject to com - pliance with certain steps, formalities and restrictions (see 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders ). Limited liability companies are subject to stricter rules. In particular, Article 2474 of the Italian Civil Code regu - lates transactions on their quotas, preventing com - panies from making transactions to purchase their quotas or provide securities for their purchase or subscription. 3.6 Formalities When a Borrower Is in Default In the event of a borrower default, the acceleration of the loan and the enforceability of the securities are governed by the provisions of the Italian Civil Code and Legislative Decree No 170/2004 of 21 May 2004 (as the case may be), as well as the facility agreement and the security documents. The lender will notify the borrower that a default event has occurred. The lender may: • withdraw from the facility agreement; • accelerate the payment obligations of the bor - rower; and/or • terminate the facility agreement. Upon withdrawal, acceleration of the payment obli - gations or termination, all outstanding amounts will be immediately due and payable (save for any grace period permitted by law).
• For registered notes, an entry in the issuer’s regis - ter of unitholders, held by the management com - pany, is necessary. • A pledge over dematerialised units is also allowed. Under Article 2358 of the Italian Civil Code, a joint stock company may not, directly or indirectly, obtain loans or provide securities for the purchase or sub - scription of its shares, unless certain conditions are met. Limited liability companies are subject to stricter rules, as detailed in 3.5 Legal Requirements Before an Enti- ty Can Give Valid Security . 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security Under Presidential Decree No 601/1973 of 29 Sep - tember 1973 (“Decree No 601/1973”), some loans and related securities granted can be exempt from the ordinary taxation regime. The borrower can pay a substitute tax, which is an all-inclusive tax at a rate of 0.25% of the principal amount of the loan. In the cases mentioned in 3.10 Taxes on Loans , the parties may elect to apply the substitute tax regime to securities. If the parties do not exercise this option, the secu - rity package will be subject to the ordinary taxation regime, including: • notary fees (in case of notarial securities); • stamp duty; • cadastral tax; • registration tax; • mortgage tax; and • governmental duties. The deed of pledge over quota granted by a third party other than the debtor incurs a registration tax of 0.5%, calculated on the taxable base equal to the amount secured by the pledge.
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