The Law of 13/01/94 no. 43 has recently entered into force, which achieved the recognition in Italy of the commercial paper, "cambiale finanziaria" in the language of the Italian legislator, the well-known short-term financial instrument the use of which by American corporations dates back to the end of the last century, and which is specially suited to the needs of small companies.

From a general point of view, it consists of a normal bill of exchange, as such provided with all typical guarantees and remedies of these documents of credit.

The issue of commercial paper can be ordered by the Board of Directors of a company without the need for a resolution of the shareholders' meeting, as is necessary, instead, for the more complicated instrument of the issue of bonds. Moreover, the minimum amount of each bill is 10,000,000 Lire (a size more than adequate for the raising of funds also from small savers).

Terms of payment of the "cambiale finanziaria" cannot exceed twelve months (a decidedly shorter term than that regarding bonds); on the other hand, international experience teaches us that the commercial paper can easily be transformed into a financial instrument of longer duration through the re-issue of new papers which substitute those which are about to lapse.

Furthermore, as the commercial paper is an instrument for the raising of funds from private investors, one should obviously also consider the limitations imposed by public law on such activity. So, the amount to be issued will have to remain within the global limits (i.e. the limits concerning the total of all forms of operations of financing, including bond issues) imposed by the Interministerial Commission for Credit and Savings. Similarly, the commercial paper will be considered for all purposes as financial stocks ("titoli mobiliari") and for that reason they can only be traded by qualified intermediaries in accordance with the regulations of the Italian Securities Exchange Commission (CONSOB) regarding the public soliciting of saving.

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.