ITALY Law and Practice Contributed by: Francesco Dialti, Vincenzo Cimmino, Valentina Bombino and Lucrezia Ghezzi, CBA Studio legale e tributario
to which international sanctions apply); however, in principle, there are no restrictions on currency trans- fers. Banks are required to report any transaction exceed- ing thresholds provided for by law due to concerns related to money laundering and terrorism financing. 3.4 Restrictions on the Borrower’s Use of Proceeds There are no general restrictions on the use of pro- ceeds from loans or debt securities for an Italian bor- rower, other than financial assistance limitations (see 5.4 Restrictions on the Target ) and the prohibition on the financing of criminal activities. 3.5 Agent and Trust Concepts Agent Concept The agent concept exists under Italian law. In particular, a mandato is an agreement under which a party undertakes to execute one or more legal acts on behalf of another party. If the mandato includes rappresentanza , those acts will be executed in the name of the other party (as if that party were execut- ing the deed itself). Trust Concept Although Italy ratified the Hague Convention on the Law Applicable to Trusts and on their Recognition 1985 (the “Hague Trusts Convention”) through Law No 364/1989, according to which foreign trusts are recognised in Italy and can be regulated by the law chosen by the settlor, Italian law does not regulate trusts. Italian Law and Practice Under Italian law, security must be granted to, and perfected in favour of, each creditor individually. In syndicated loans, secured creditors appoint an agent on the basis of mandato con rappresentanza . The agent is entitled to exercise the secured credi- tors’ rights and to enforce the security in accord- ance with the intercreditor arrangements. However, each secured creditor must participate in any judicial enforcement.
As an exception to the foregoing, Article 2414-bis of the Italian Civil Code (relating to the issuance of bonds by joint-stock companies) provides that all kinds of security and guarantees supporting bonds can be granted not only in favour of all bondholders, but also to a representative of the bondholders. The represent- ative will be entitled to exercise, in the name and on behalf of the bondholders, all rights relating to such security/guarantee, including enforcement. Parallel debt arrangements are generally not recognised in Italy. 3.6 Loan Transfer Mechanisms Perfection requirements vary depending on whether the transfer is a transfer of contract ( cessione di con- tratto ) or an assignment of receivables ( cessione del credito ). A transfer of contract requires the consent of all par- ties, including the assigned debtor and guarantor. This can be obtained before the assignment, by including an express consent in the relevant loan agreement or guarantee, as applicable. By contrast, the assignment of receivables does not require the consent of the assigned debtor and guar- antor, unless the loan agreement or the guarantee, as applicable, expressly prohibits the assignment of the receivables arising therefrom. The assignment of receivables can be implemented under: • Italian Civil Code provisions on the transfer of receivables; • Article 58 of the Consolidated Banking Law, which allows banks to purchase receivables portfolios; and • the Securitisation Law, which allows SPVs to pur- chase receivables portfolios or single names (see 1.5 Banking and Finance Techniques ). In each case, receivables are transferred along with any relevant security or guarantee. A transfer under the Italian Civil Code requires noti- fication to the assigned debtors and the execution of certain formalities with respect to certain security
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