Italy: Italian Securitisation

Last Updated: 2 December 1999

The present Memorandum is intended to set-forth the more relevant features of the Law relating to Securitisation (see the attached Italian text) in order to permit an immediate evaluation of the practical-operative and legal aspects.

  • Applicability Field

The Law and the related benefits are applicable to the assignment, upon compensation, of existing and future receivable/credit-transactions to be identified en bloc, effected by an Italian assignee in respect of which the provisions of financial entities are applicable (Articles 106-107 - Section V, of the Unified Tax of Banking Law).

The standard structure of the securitisation contemplates that the assignee (or a different company – S.P.V.), for the purposes to purchase the credits, issues financial instruments – qualified as such by the Legislative Decree No. 58 of February 4, 1998 and Article 129 of the Banking Law – the repayment of which as well as any other payment shall be secured by the flows of payments deriving from the assigned debtors, representing a separate asset from the other assets of the company or of other transactions (see structure under Attachment "A").

In the first phase, the securitisation transactions offered to professional investors on the basis of a Information Memorandum, shall be more easier, since it should be possible to avoid the evaluation of the merit of the credits by experts; evaluation necessary in order to offer the financial instruments to the public, and so in accordance with the rules to be established by CONSOB pursuant to an appropriate Regulation.

  • Specific terms and effectiveness of the assignment

The Law entitles the applicability of the specific terms and conditions of assignment provided for in Article 58 of the Banking Law dealing with legal relationships identifiable en bloc and, therefore, having a common element of identification, traceable in the technical form, in the economic area of destination, in the characteristics of the counter party, in the geographical area of the operations or in any other element which may reveal such nature in respect of the credit-relationships assigned.

More specifically (i) the notice requirements shall be limited only to the publication of the notice of assignment on the Official Gazette, with the exemption from the requirements set out by Article 1264 of the Civil Code and (ii) the liens and the securities in favour of the assignor, shall maintain their validity also in favour of the assignee without any additional formality or entry (therefore, existing securities shall automatically follow the credit assigned).

Additional benefits are represented by the exclusion of the applicability of the action to obtain revocation under the bankruptcy Law in respect of (a) the payments made by the debtors assigned and (b) the reduction to 6 and 3 months respectively, of the statutory limitation usually provided for by the law to promote such action.

  • Tax aspects

A number of provisions dealing with tax aspects and the allocations of possible losses in the Balance sheet are contemplated in the Law and reveal the interesting nature of such transactions.

First of all the financial instruments issued may benefit of the replacement tax (imposta sostitutiva) in respect of income taxes at the rate of 12.50 %, applicable on interest and other proceeds payable to certain interest recipients (physical persons, investment funds, pensions funds resident in the Italian territory), as well as of the exemption for foreign residents of countries having antidouble taxation treaties permitting the exchange of information.

Are also applicable to the assignments having as object medium-long term credits and specific financing made pursuant to specific government or administrative legislation, benefits in respect of registration and stamp taxes related to the performance, termination and granting of securities connected with the securitisation (DPR No. 601, Article 15).

Specific allocations are available in respect of the preparation of balance sheet for the reduction of value on the assets assigned or in respect of the securities related by the transaction.

  • Financing structure

The applicability of the securitisation rules to a financing structure in favour of an assignor, may be of particular interest (see structure under Attachment "B").

ATTACHMENT "A"

Securitisation
Attachment A -Securitisation
ATTACHMENT "B"
Securitisation
Financial Structure
Attachment B -Financial Structure

For further information, please contact us.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

 
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