ITALY Law and Practice Contributed by: Francesco Dialti, Vincenzo Cimmino, Valentina Bombino and Lucrezia Ghezzi, CBA Studio legale e tributario
• over unregistered movable assets (including receivables and other immaterial assets), whether existing or future and whether determined or deter- minable, also by making reference to one or more categories of products or to an overall value; or • by entry on the aforesaid electronic register. From the date of registration, the pledge acquires its ranking and becomes enforceable against third par- ties and in insolvency proceedings. The entry lasts for ten years and is renewable before its expiry. The pledged assets can be transformed or sold. The pledge is automatically transferred to the product resulting from the transformation, the consideration arising from the sale or the substitute asset purchased with that consideration, as applicable, without giving rise to the creation of new security; this is very impor- tant to avoid claw-back risk. 5.3 Downstream, Upstream and Cross- Stream Guarantees Under Italian law, the entry into a transaction (includ- ing the granting of a guarantee or security interest) by an Italian company is subject to, inter alia, compliance with the rules on corporate benefits, corporate author- isation and certain other Italian mandatory provisions. An Italian company may only take actions which fall within the corporate purpose of the company, as stated in the company’s articles of association. Fur- thermore, according to Italian law and principles, for an Italian company to issue a guarantee, it must have an actual corporate interest/benefit in the transaction. This benefit may be direct or indirect, but it must be valuable and measurable using objective and rigorous criteria. The concept of a “corporate benefit” is not specifically defined in the applicable legislation and is determined by a factual analysis on a case-by-case basis. As a general rule, corporate benefit is to be assessed at the level of the relevant company on a stand-alone basis. However, in certain circumstances and subject to specific rules, the interests of the group to which the company belongs may also be taken into consideration. While corporate benefit for a downstream guaran- tee/security interest (ie, a guarantee/security interest granted to secure financial obligations of direct or indi-
rect subsidiaries of the relevant grantor) can usually be easily proved, the validity and effectiveness of an upstream or cross-stream guarantee/security inter- est (ie, guarantee/security interest granted to secure financial obligations of the direct or indirect parent or sister companies of the relevant grantor) depend on the existence of an actual and adequate benefit in exchange for granting such guarantee/security inter- est. In particular, the amount secured must, in any event, be reasonable taking into account the financial conditions and turnover of the company granting the security. As a general rule, the absence of an actual and ade- quate benefit could render the transaction (including granting a security interest or a guarantee entered into) by an Italian company ultra vires and potentially subject to a conflict of interest. Any security interest or guarantee granted by an Italian company, without a proper corporate interest, could be declared null and void if the lack of corporate benefit was known, or presumed to be known, by the third party and such third party acted intentionally against the interest of the Italian company. Civil liabilities may be imposed on the directors of an Italian grantor should a court hold that they did not act in the best interest of the grantor and that the acts car- ried out did not fall within the corporate purpose of the company or were against mandatory provisions of Ital- ian law. The lack of corporate benefit could also result in the imposition of civil liabilities on those companies or persons ultimately exercising control over an Italian grantor or having knowingly received an advantage or profit from such improper control. Lastly, under Italian law, a maximum guaranteed cap should be agreed. In certain conditions, the granting of guarantees may be considered as a restricted financial activity within the meaning of Article 106 of the Italian Banking Act, whose exercise is exclusively reserved to banks and authorised financial intermediaries. Non-compliance with the provisions of the Italian Banking Act may, among others, entail the relevant guarantees being considered null and void. In this respect, Italian Decree No 53 of 2 April 2015 issued by the Italian Ministry
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